Today has been relatively weak in terms of price performance for most tech stocks. Investors appear to be remaining bearish on the outlook for technology companies. Given the macro headwinds we’ve seen lately, this view certainly makes sense.
Tech stocks have continued to struggle as investors price in the impact of higher interest rates on the valuations of most high-growth companies. Interestingly enough, mega-cap stocks have not been spared from the carnage either. In early afternoon trading today, shares of Microsoft (NASDAQ:MSFT), Tesla (NASDAQ:TSLA), Meta Platforms (NASDAQ:FB), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Nvidia (NASDAQ:NVDA) are all heading lower.
In fact, the heat map for the S&P 500 looks mostly red right now, with the largest components of the index seemingly seeing the most interest. As expected, this has translated to an overall bearish day in the market for passive investors in index funds.
Let’s dive a bit deeper into what’s driving these declines today.
Why Are Tech Stocks Sinking Today?
Of course, the macro story with this market is hard to ignore right now. This week’s rather impressive inflation numbers have sowed significant worry among investors taking a medium-term view. Over the short term, rising interest rates also stand to limit growth, providing a bearish outlook overall.
However, now is also the start of earnings season, with a number of companies — mainly banks and airlines — already releasing numbers. Cautious outlooks arising from this macro environment appears to be playing into today’s price action as well.
For Twitter (NYSE:TWTR) specifically, today’s price action is also interesting. Shares of the social media platform jumped this morning on news that Elon Musk had put forward an offer to buy the company outright. However, depressed price action in the market has since taken shares of TWTR stock below yesterday’s close.
Overall, the market appears to be gravitating toward the idea that a recession may be likely in the medium term. As such, defensive positioning may continue to hit large-cap tech stocks for some time.
On the date of publication, Chris MacDonald 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.