percefal
Utente Old Style
Things have obviously been bad for tech stocks and the Nasdaq Composite of late and now the index officially entered correction territory Wednesday.
The tech-heavy index, which has endured a difficult start to 2022, slipped 1.2%, closing 10.7% below its all-time closing high in November—its first correction since March 2021.
The reasons are well-covered, and all intertwined; inflation surging to 40-year highs, growing expectations for the Federal Reserve to raise interest rates four times this year, and rising bond yields. Those are all bad news for companies with high valuations based on future profits.
The resilience of the big names had insulated the wider index at the end of 2021 but even they have succumbed so far in 2022. Apple, Amazon, Alphabet and Meta have all fallen more than 5% year-to-date, while Microsoft is 10% down and Netflix has tumbled 14%.
But it isn’t all doom and gloom. Corrections are often seen as buying opportunities.
Granted, it isn’t quite bargain bucket stuff given U.S. tech’s lofty valuations, but it does warrant at least some reconsideration.
If anything can stop the rot, it’s earnings season. Guidance will likely be key to whether earnings will arrest the slide or extend the losses.
Investors won’t have to wait long to find out. Netflix reports earnings after the close Thursday, while Microsoft and Apple are due to report next week.
The tech-heavy index, which has endured a difficult start to 2022, slipped 1.2%, closing 10.7% below its all-time closing high in November—its first correction since March 2021.
The reasons are well-covered, and all intertwined; inflation surging to 40-year highs, growing expectations for the Federal Reserve to raise interest rates four times this year, and rising bond yields. Those are all bad news for companies with high valuations based on future profits.
The resilience of the big names had insulated the wider index at the end of 2021 but even they have succumbed so far in 2022. Apple, Amazon, Alphabet and Meta have all fallen more than 5% year-to-date, while Microsoft is 10% down and Netflix has tumbled 14%.
But it isn’t all doom and gloom. Corrections are often seen as buying opportunities.
Granted, it isn’t quite bargain bucket stuff given U.S. tech’s lofty valuations, but it does warrant at least some reconsideration.
If anything can stop the rot, it’s earnings season. Guidance will likely be key to whether earnings will arrest the slide or extend the losses.
Investors won’t have to wait long to find out. Netflix reports earnings after the close Thursday, while Microsoft and Apple are due to report next week.
