Problems have been brewing since the start of the year with more than a third of the stocks in the Nasdaq 100, which represents the exchange’s largest non-financial companies, down at least 50% from their 52-week highs by just the second week of January. Meanwhile, the percentage of stocks on the Nasdaq Composite that set new 52-week highs stood at just 1% on Wednesday.
Big Tech has experienced the wildest volatility swings in recent weeks since the pandemic shuttered the U.S. economy in 2020. At one point this month, Facebook parent Meta Platforms Inc. posted the worst one-day drop in market value in stock-market history while Amazon.com posted the biggest single-day gain in market capitalization in U.S. history.
Shares of smaller, fast-growing tech companies have been especially hurt by concerns that they would be more vulnerable to tighter monetary policy since they are more reliant on capital markets for financing rather than incredible riches that have helped some founders skyrocket to the moon.
U.S. tech companies may face further pain as investors swap growth stocks for energy, financials and other cyclical shares that historically have benefited from improving economic growth and higher rates. The shifts likely represent a rebalancing away from the atypical conditions that have persisted for more than a decade and helped create a cadre of trillion-dollar companies dominating stock indexes.
--With assistance from Abhishek Vishnoi, Sagarika Jaisinghani, Thyagaraju Adinarayan, Naoto Hosoda and Ryan Vlastelica.
This article was provided by Bloomberg News.