Tech stocks are plummeting this morning as investors wrestle with inflation fears alongside today’s crypto crash. Companies like Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA), Meta (NASDAQ:META) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) are eying losses as high as 5% as the S&P 500 opens in bear-market territory.
Stocks are down across the board this morning as a number forces scare investors away from tech and growth stocks. The S&P is down 2.9% at the time of writing. This loss, should it hold through the day, would signal entrance into a bear market. A bear market is defined by a 20% drop from its recent peak. At the time of writing, the S&P is down about 21.2%.
Meanwhile, today’s surprise crypto selloff is making waves across equity markets. Flagship digital assets Bitcoin (BTC-USD) and Ethereum (ETH-USD) are down 15% and 18%, respectively, as they continue to fall from last year’s peak. BTC is down to $23,338 per coin, a far cry from its roughly $67,500 all-time high.
Tech companies, which tend to operate in correlation with the crypto market, are seeing the blowback from today’s digital asset dump.
Tech Stocks Fall as Inflation Fears Spook Investors
Alphabet and Apple are both down about 3% so far today, and Meta and Tesla are on track to lose roughly 5% of their share price. The tech-heavy Nasdaq Composite is in the red nearly 3.5% today, on track for one of its worst days in recent memory.
Tech and growth stocks are likely the unfortunate casualties of Friday’s Consumer Price Index (CPI) report, which showed inflation grew 1% month-over-month in May and 8.6% year-over-year. Energy prices were the main driver behind the rising prices, jumping 36% year-over-year. The CPI report came as a bearish surprise to investors after prices seemed to ease slightly in April.
Strong inflation will likely prompt continued hawkish action from the Federal Reserve, likely in the form of interest rate hikes. The Fed has repeatedly conveyed the importance of lowering prices. However, that that may come at the cost of even more economic slowdowns. Tech and growth companies, many of which are highly leveraged, remain the most susceptible to rising interest rates.
The Nasdaq is down more than 30% this year, with no clear end in sight for the recent tech selloff.
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.