Technology stocks got horribly pounded on Wednesday. The S&P 500 fell over 3% and the Nasdaq 100 fell over 4%, marking the worst selloff in seven years. Out of the 11 main sectors in the S&P 500, tech stocks dropped the most, dragging down the market with them.
The crash was attributed to various factors such as high treasury yields, the interest rate hikes by the Federal Reserve and the ongoing trade war with China. It seemed that tech stocks, which were leading till now, had lost their appeal and investors appeared to be questioning their profit growth, which is anticipated to fall behind the S&P 500 for the first time in four years.
The FAANG stocks lost $172 billion in combined value on Wednesday
Based on data from Bloomberg, tech companies worldwide lost $900 billion in market value since late August. Stocks like Amazon (AMZN), Netflix (NFLX) and Nvidia (NVDA) have dropped 10% or more since the beginning of October while Chinese tech stocks like Alibaba (BABA) and Tencent have also seen huge declines. There are also concerns surrounding semiconductor stocks as the industry sees impacts from trade and tariffs.
The FAANG stocks – Facebook (FB), Amazon, Apple (AAPL), Netflix and Alphabet (GOOGL) took huge hits on Wednesday losing $172 billion in combined value. During the one week since October 3, the FAANG group has lost over $300 billion in market cap. During premarket hours on Thursday, the FAANG stocks stayed down but managed to pare their losses slightly.
Facebook dropped 4% on Wednesday and lost more than $15 billion in market cap, wiping off $2.5 billion from CEO Mark Zuckerberg’s fortune. On Thursday, Facebook was down over 1% during premarket but later regained ground.
The first trillion-dollar US company fell 4.6% and lost $51 billion on Wednesday. Apple was also down over 1% in Thursday’s premarket trade before picking up slightly in the regular trading session.
Amazon, the second one to cross the trillion-dollar mark this year, dropped 6% on Wednesday and took the highest loss of $56 billion to its market cap in the group. Founder and CEO Jeff Bezos saw his net worth drop by $9.1 billion. Amazon was down 0.7% during premarket on Thursday.
Netflix dropped 8% and lost $13 billion in market value on Wednesday. On Thursday, after seeing a drop of over 2%, Netflix rose 1.8% in premarket trade.
Alphabet fell 4.6% and lost over $36 billion in market cap on Wednesday. Co-founders Larry Page and Sergey Brin lost more than $2 billion each from their coffers.
Some experts feel this crash is temporary and that a correction was due on tech stocks, which took huge hits because their growth and declines are both on high levels. They believe that the economy is robust and that the demand for technology is likely to continue. The markets remained volatile on Thursday but the stocks appear to be seeing a slight recovery.
As of 12:10 pm ET, Facebook was up 1.08%, Apple was up 0.13%, Amazon was still down 2%, Netflix was up 0.14% and Alphabet was up 0.93%.