What started as a third-quarter rebound fell through for tech investors.
of NASDAQ Composite After dropping 5.5% the previous week, it is down 5.1% this week.It marks the worst two-week gain for a tech-focused index since it plummeted more than 20% in March 2020 at the start of the Covid-19 pandemic in the US.
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With the third quarter due to end next week, the Nasdaq is poised for a third straight quarter of decline if it fails to undo its current 1.5% decline in the last five days of trading in the period.
Investors have been selling off tech stocks since the second half of 2021, believing that higher inflation and higher interest rates will have a much bigger impact on the companies that have performed best during the boom. The Nasdaq is now just above his two-year low in June.
Markets have been hit by continued rate hikes by the Fed. Benchmark interest rate hike It rose another three-quarters of a percentage point, suggesting it will continue to rise far above its current level as it seeks to bring inflation down from its highest level since the early 1980s. The central bank has raised the federal funds rate to a range of 3% to 3.25%.
Meanwhile, the dollar strengthened as higher interest rates pushed 10-year Treasury yields to an 11-year high. strengthenThis makes U.S. goods more expensive in other countries, hurting tech companies heavily focused on exports.
Cresset Capital Chief Investment Officer Jack Ablin told CNBC’s TechCheck on Friday: “A strong dollar doesn’t help technology. High 10-year Treasury yields don’t help technology.”
Among the mega-cap companies, Amazon had its worst week, dropping to nearly 8%. Parent of Google alphabet and facebook parents meta Each fell about 4%. All three companies are in the midst of cost cutting or hiring freezes given a combination of weak consumer demand, subdued advertising spending and inflationary pressures on wages and products.
as CNBC report Friday, Alphabet CEO Sundar Pichai At this week’s all-hands meeting, I was confronted with a barrage of questions from employees. Staffers expressed concern over Pichai’s recent comments about cutting costs and the need to increase productivity by 20 percent to his.
With the tech earnings season about a month away, growth expectations are muted. Alphabet is expected to report single-digit earnings growth after growing more than 40% year-over-year, but Meta sees its second straight quarter of declining sales. Apple Growth is expected to be slightly over 6%.Expectations for Amazon microsoft are high, about 10% and 16% respectively.
Last week was particularly tough for some companies in the sharing economy. Airbnbs, uber, lift When door dash All decreased between 12% and 14%. Some of the sharpest declines in the cloud software market, which surged in recent years before plummeting in 2022 GitLab (-16%), Bill.com (-15%), Asana (-14%) and Confluent (-13%).
Sharing economy stocks of the week.
cloud giant Salesforce held its annual Dreamforce conference in San Francisco this week. As part of a conference focused on financial metrics, the company announced: New long-term profit target Demonstrated determination to operate more efficiently.
What Salesforce is aiming for Adjusted operating margin 25%Including upcoming acquisitions, Chief Financial Officer Amy Weaver said: This beats his 20% goal announced by Salesforce. one year ago Towards 2023. The company is looking to lower its sales and marketing share through more self-service efforts and improved sales force productivity.
Salesforce stock is down 3% for the week and 42% for the full year.
“There’s so much going on in the market,” co-CEO Marc Benioff told CNBC’s Jim Cramer in an interview on Dreamforce. “Between a currency and a recession or a pandemic. All these things are like navigating a lot of power.”