Big names in Big Tech closed Friday out in the red, capping off a rough week for the market. With the weekend here, investors may want to know: Why were stocks down today?
Well, it seems stocks have been in something of a free fall recently amidst mounting concerns over supply chain imbalances, rising inflation and impending interest rate hikes. Indeed, after a 2021 marked by rapid and largely unexpected growth, 2022 has had a bumpy start.
Many analysts believe this week’s comments from Federal Reserve Chair Jerome Powell may be behind today’s selloff. Yesterday, Powell raised expectations for a 50-basis-point interest rate hike at the May 3-4 Federal Open Market Committee meeting. The hope is that a more aggressive rate hike will combat inflation, which has trended near multi-decade highs recently.
This comes in addition to a newly published New York Fed paper that largely disproves prior claims about inflation being “transitory.” Indeed, the paper describes that the initial jump in inflation was likely because of pandemic-induced economic factors, but that recent price rises can’t be as easily traced back to any one cause.
Amidst the S&P 500’s third consecutive weekly drop, what’s going on with the tech powerhouses at the top of the markets?
Why Else Are Stocks Down Today?
This week’s bearish wave further pushes the S&P 500 into the red for the year so far. The Dow Jones Industrial Average and Nasdaq Composite also logged massive drops today. The Dow lost 900 points today, its single worst one-day drop since October 2020.
Netflix’s (NASDAQ:NFLX) shockingly poor earnings call to start the week may have also initiated this bearish wave. The company reported losing subscribers for the first quarter in more than a decade, sending the markets into something of a selling frenzy.
Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:FB) each fell today, seeing losses between 2%-5% today. GOOG logged the biggest losses of the tech titans, shedding about 4.3%.
It remains to be seen whether the current bearish conditions will persist. Rest assured economists and analysts everywhere will be closely watching the markets going into next month’s Fed meetings.
On the date of publication, Shrey Dua did not hold (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.