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The Nasdaq Composite experienced its worst monthly performance in more than a decade as technology stocks fell to deep lows while out of control inflation and rising interest rates increased fears of a looming recession.
The Wall Street Journal reported that the tech sector selloff “has erased trillions of dollars in market value from the tech-heavy gauge” as investors sour on everything from software and semiconductor manufacturers to social-media giants.
On Friday, the Nasdaq dropped 4.2%, increasing its overall losses for the month of April to more than 13%. This marks its worst showing since October 2008. Overall, the index is down 21% in 2022, marking the worst start to a year on record.
The S&P 500, generally considered to be a broader index, similarly has seen considerable losses in the month of April. With four consecutive weeks of losses, the S&P 500 has lost 8.8% and 13% in year-to-date losses. The Dow Jones Industrial Average has suffered a similar fate falling 4.9% this past month and is down more than 9% so far this year.
April 2022 has been the worst month for both the S&P 500 and the Dow Jones Industrial Average since March 2020 when the economy began a massive downturn at the outset of the COVID-19 pandemic.
The Journal suggested that the drastic decline in tech stocks marks a “dramatic shift” from economic trends in recent years. Investors ditched their holdings in some of the biggest tech companies which have been “stock-market darlings for much of the past decade.” Many of these stocks kept the market and its indexes afloat during the economic lows of the COVID-19 pandemic.
Some of the most reliable stocks from the past few years became the market’s biggest losers. Netflix decreased by 49% in April, Nvidia fell by 32%, and PayPal Holdings declined by 24%. These three tech stocks are down more than 35% in 2022.
Similarly, the FAANG stocks consisting of Facebook’s parent company Meta Platforms, Apple, Amazon.com, Netflix, and Google’s parent company Alphabet have collectively lost more than $1 trillion in market value this past month.
Stocks began the year with record highs but as worries about the Federal Reserve raising interest rates and inflation continue to grow stocks fell at a rapid pace.
Aashish Vyas, an investment director at Resonanz Capital, said, “We’re going into a higher volatility regime, when fundamentals matter again. It does seem like we are at a systemic shift.”