RE: Scores on the doors19 Jan 2022 18:21
Government bond yields, which move opposite prices, have been rising sharply in anticipation of a stronger intervention by the Fed, which is about to start raising interest rates after a long period of easy money. That makes riskier assets with rich valuations look less attractive.
The ARK Innovation exchange-traded fund, whose top holdings include Tesla (TSLA), Roku (ROKU), Teladoc Health (TDOC), Zoom Video (ZM) and Coinbase, has lost more than 30% since the Nasdaq peaked.
Bigger tech companies with more cash on hand are much less sensitive to interest rate hikes. But they haven't been spared as investors reduce their holdings in the entire sector. Apple (AAPL) and Amazon (AMZN) are more than 4% lower so far this year, while Facebook owner Meta (FB) is down 5% and Google parent Alphabet (GOOGL) is off 6%.
Is this a turning point as the pandemic economy enters a new era? Since 2020, tech companies have powered huge market gains, increasing their clout and generating substantial returns for shareholders.
Not quite, according to analysts. They see the declines as a short-term adjustment rather than the start of a longer period of weakness.
"We have been braced for heightened volatility as markets digest signals from the Fed that tightening will come both sooner and faster than previously expected," Mark Haefele, chief investment officer at UBS Global Wealth Management, said Wednesday. "But while we believe the Fed is likely to raise rates as soon as March, with three hikes in 2022, this shouldn't derail the economic expansion or the equity rally."
A bounce for tech stocks is likely, but probably not before the Fed's meeting next week, Beauchamp said. Investors are also waiting for results from the industry's biggest players for the final three months of 2021.
"Investors are in a much more demanding mood than they have been for a long time [with] earnings," he said, noting that shares of JPMorgan Chase (JPM) and Goldman Sachs (GS) both fell this week after their earnings releases.
That means those who want to buy tech shares at a cheaper price may wait a bit longer to scoop them back up. Beauchamp is confident that moment is coming — it's just a question of when.
https://edition.cnn.com/2022/01/19/investing/premarket-stocks-trading/index.html
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