What's happening to tech stocks at Nasdaq

Fears of inflation and rising interest rates lead to value other investments. The index loses 10%, some stocks 20%. Tesla goes from $ 900 to $ 563.

Wall Street Photo by Tumisu from Pixabay A correction phase is going through several tech stocks in the Nasdaq 100 index, which includes the 100 non-financial stocks in the tech index. According to the values ​​indicated by the last evening closings, some stocks have lost share at levels that are around - 20% compared to the peaks reached in the last year, even just a few weeks ago. The phenomenon concerns, for example, PayPal, Amd, Nvidia and Apple but the same index, which groups companies based on their market capitalization, has lost 10% compared to the maximum reached just three weeks ago. Tesla, for example, dropped from $ 900 per share on January 25 to around $ 563 today, an ups and down also for Elon Musk, who owns about 18% of the shares and meant $ 27 billion lost last week, CNN explains.

Tech stocks, according to some analysts, would be discounting the fear of a future rise in interest rates that could accompany inflation. The president of the Fed, the American central bank, Jerome Powell has pronounced himself on "an upward pressure on prices" and "transitory increases in inflation". These could occur when the economy restarts after the Covid restrictions and the market fears that federal authorities do not want to take aggressive measures to control a rise in interest rates or that they are capable of it. Meanwhile, the yield on the bonds is already increasing, explains Cnbc.

The peculiarity of tech stocks is that they are valued on the assumption of strong growth in cash flows, but if inflation and interest rates increase, the value of this expected cash flow compared to the current investment declines. This means that investors may want to pay for a share at a lower price: for these reasons, tech stocks undergo similar corrections that are more evident than the rest of the market. If Tesla is just a case history, even a stock known as Netflix, for example, in January was sailing on the all-time highs of the last year (593 dollars) and yesterday it lost -4.47%, falling to 493 dollars. According to some analysts, if interest rates continue to rise, US 10-year Treasury bills may look more profitable than they did a week ago, making other investments less attractive.


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Topics

Apple Finance Netflix United States Tesla globalData.fldTopic = "Apple, Finance, Netflix, US, Tesla "

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