Major technology firms have lost more than $1 trillion in combined market value over the past three trading sessions, as investors flee risky growth stocks in favor of safer consumer staples.
Since the closing bell on Wednesday, following the Federal Reserve’s rate hike announcement, tech stocks have been hardest hit, with Apple alone losing more than $220 billion in market value, according to a CNBC analysis.
Though markets rebounded somewhat on Tuesday morning, the tech-heavy Nasdaq composite has dropped 26 percent so far this year, and is trading at its lowest level since November 2020.
Amid the selling, investors have been flocking to classic consumer staples companies such as Campbell Soup, General Mills and J. M. Smucker.
Following the Federal Reserve’s half-point interest rate hike on Wednesday, markets have been bracing for a higher-rate environment and economic slowdown.
It has reduced the appeal of so-called growth stocks, which have most of their projected profits far in the future, and trade at much higher earnings multiples than well-established firms, also known as value stocks.
‘With slowing growth, regardless of a recession or not, you’re going to see multiple compression for anything that’s growth related,’ Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, told Reuters.
‘It’s not necessarily an indictment of their fundamentals. It’s an indictment of their multiples,’ he added. ‘Investors are far more concerned with capital preservation at this point, and you’re more concerned with raising cash in the event the macro environment worsens.’
Between Wednesday’s closing bell and the end of trading on Monday, Tesla lost $199 billion in market cap, continuing its slide months after seeing its valuation fall below $1 trillion.
Microsoft has lost around $189 billion in value, and Amazon’s market capitalization has declined by $173 billion.
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Google-parent Alphabet has lost about $123 billion in market value over the three days, while Facebook parent Meta P… (Read more)
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