Market Influence
Microsoft, Amazon and Alphabet have all seen their shares fall more than 30% this year, compared with a roughly 18% decline for the S&P 500. Apple, the only of the megacaps whose shares are living up to the notion that big tech’s massive scale and dominant market positions would insulate them from a market downturn, has fallen 12%.
Big tech’s fall from grace has eroded its influence over the market-capitalization weighted S&P 500 Index this year to the lowest since April 2020. Still, at 19% of the benchmark, Apple, Microsoft, Alphabet, Amazon and Meta Platforms hold bigger sway than the utilities, energy and consumer sectors combined.
So far this week the carnage has done little to dampen enthusiasm on Wall Street this week amid optimism that the Federal Reserve is nearing a pause in its rate-hiking campaign with the economy weakening. The S&P 500 rallied for a second-consecutive week with a 4% advance.
Fang stocks are on track for their worst week ever relative to the S&P 500
Still, a gauge of the four original FANG stocks -- Meta Platforms, Amazon, Netflix and Alphabet -- is on track for its worst week ever relative to the S&P 500 Index.
Megacap tech stocks, the go-to place for investors to hide out during the pandemic, have been among the market’s biggest losers this year as the Federal Reserve embarked on its fastest tightening program in decades.
“Not even tech giants are immune to that,” said Michael O’Rourke, chief market strategist at Jonestrading. “These earnings reports clearly show how inflation is catching up to consumer spending and how rate hikes are whipsawing the economy.”
This article was provided by Bloomberg News.