Tech stocks are down across the board today on a tumultuous day for the markets. It seems recent macroeconomic fears, plus an ominous premonition from Elon Musk has investors sheepish.
Meta Platforms (NASDAQ:FB), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) are each eying drops between 3% and 4% at the time of writing. Meanwhile Tesla (NASDAQ:TSLA) is in the red more than 8% likely due to its infamous Chief Executive, Elon Musk. Musk sent an email to executives on Thursday in which he described a “super bad feeling” about the state of the economy. The email, titled “pause all hiring worldwide,” detailed his intention to cut about 10% of jobs at his massive electric vehicle (EV) company.
The note comes just days after Musk issued a stark warning to Tesla employees. Earlier this week Musk sent a message to workers requiring them to return to the workplace, or leave the company. This would put an end to the work-from-home policy first enacted in the face of the Covid-19 pandemic, back in 2020.
Musk’s message alone may be a strong motivating force behind today’s drop. Tesla remains a company dependent on constant growth. The notion of reducing its workforce may read as a sober warning to investors that its growth will stall.
Tech Stocks Fall as Macroeconomic Fears Bubble Over
Today’s drop isn’t just affecting Tesla or EV companies, however. Longtime mainstays like Alphabet, Meta and more are pushing the tech-heavy Nasdaq Composite down 2.3%.
Tech companies may be hit by the ravages of an anti-growth trading environment. This week the Federal Reserve began reducing its balance sheet. The central bank ceased replacing matured bonds in its ownership, this is formally known as quantitative tightening (QT).
Since the start of the pandemic the Fed has purchased billions of dollars in bonds every month as a way to inject money and liquidity into the economy. While the process was largely successful at keeping the markets afloat, it came with staunch consequences in the form of rampant inflation.
The Fed is now taking hawkish actions to lower prices, potentially at the cost of the stock market. Rising interest rates combined with QT doesn’t bode well for growth and tech stocks. This is something investors seem to be well aware of. This doesn’t even take into account production hiccups stemming from the Covid-19 lockdowns in China. The country is still largely locked down, although restrictions are beginning to ease. China is the production headquarters of many tech companies.
Today’s sell-off could put the Nasdaq in the red this week, for the 10th time in the past 11 weeks.
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.