Today, popular tech stocks, such as Adobe (NASDAQ:ADBE), Microsoft (NASDAQ:MSFT), Tesla (NASDAQ:TSLA) and Palantir (NYSE:PLTR) are down across the board. Adobe led the pack in losses, closing down 8%. With no company-specific news affecting these names, why exactly are tech stocks down so much today?
Why Tech Stocks Are Down Today
Several macroeconomic factors, such as the omicron variant, the November non-farm payroll (NFP) report, and tapering by the Federal Reserve are to blame.
Investors are still weighing the possible effects of the omicron variant as new data pour in. Vaccine makers, such as BioNTech (NASDAQ:BNTX) and Moderna (NASDAQ:MRNA), have publicized that if necessary, a new vaccine should be available during the first quarter of 2022. Moderna CEO Stephane Bancel spooked investors earlier this week after he noted that current vaccines may be less effective against the new variant.
The second factor dragging tech stocks down today is a disappointing November NFP report. The NFP report is a monthly report released by the Labor Department that details the number of new goods, construction, and manufacturing jobs created, excluding jobs related to agriculture, private households, and a few other categories. The report is usually released the first Friday of every month and lends investors details on the health of the economy.
This month, the number came in at 210,000 jobs, which fell well short of the estimate of 550,000 by 61%. The large miss was the worst month for job creation this year and came in as a surprise after October’s revised number of 546,000. Despite this, the unemployment rate for November came in at 4.2%, which beat the expectation of 4.6%. That rate is the lowest since the pandemic began.
Justin Wolfers, an economist at the University of Michigan, commented that:
“This was a moment for people to return to malls and to return to work. The COVID-related news has only gotten worse since then.”
Finally, Jerome Powell, chair of the Fed, announced his intent to possibly speed up the rate of tapering earlier this week. Powell noted that considering the economic backdrop, the Fed may “consider wrapping up the taper of our asset purchases… perhaps a few months sooner.” The Fed started the tapering process last month, lowering its monthly asset purchases by $15 billion per month. At that rate, tapering should end by mid-2022. Investors were taken aback, as these comments came at a time when the market was tanking due to the omicron variant.
Coupled with the low NFP report, investors are wondering if Powell will reverse his plans to increase the speed of tapering. That question may be answered when the Fed meets on Dec. 14-15 to discuss monetary policies.
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.