CNBC reported that the world’s largest technology companies saw their capitalization blown by $1 trillion in just three trading sessions.
Shares in the biggest companies have sold off since the Fed raised interest rates on Wednesday. However, technology companies have been hit harder than other sectors of the economy.
Currently, investors are no longer interested in the technology sector, which has played a leading role in the market in recent years and even during the pandemic. Currently, the cash flow is being directed to safer stocks in the market.
Apple – the world’s largest public company that has seen $220 billion in value blown away since Wednesday’s trading session – the same day Fed Chairman Jerome Powell declared that inflation was too high and “committed to will firmly stabilize the price situation.”
“The US economy is very strong and is well positioned to turn around with a tighter monetary policy,” he added. He predicts that the US economy will witness the “softest or softest landing” despite the tightening of monetary policy.
In addition, the plan announced by the Fed after the meeting on May 4 also includes reducing the size of the balance sheet taking place in phases. The U.S. central bank will limit the proceeds from the bond issue to maturity each month when reinvesting the remainder. Starting June 1, $30 billion in Treasuries and $17.5 billion in mortgage-backed securities will apply. After three months, the limit on Treasuries will increase to $60 billion and $35 billion for mortgages.
Initially, the market reacted positively to Mr. Powell’s comments but optimism gradually faded in the days that followed. Stocks both fell on Thursday and continued to fall on Friday and continued to fall on Monday.
Here are the companies that have seen the biggest drop in value in the last 3 trading days:
Microsoft lost $189 billion in value.
Tesla lost $199 billion, its total value falling below $1 trillion.
Amazon saw its market capitalization drop by $173 billion.
Alphabet – Google’s parent company saw $123 billion blown away in the past week.
Meta Platforms – Facebook’s parent company lost $ 70 billion in value.
Brunello Rosa, CEO and director of research at Rosa & Roubini, a consulting firm he co-founded with economist Nouriel Roubini, said investors initially welcomed the news that the Fed would not raise rates by zero. 75%, but he warned that further 0.5% rate hikes are likely to appear in a row over the next few months. He also said that the Bank of England (BoE) is the most realistic unit in the current situation when it admits that the risk of the UK economy falling into a recession is completely real.
“Obviously central banks are being quite adamant at the moment. But the reality is that excessive policy tightening will negatively affect economic growth,” he said.
“In the eurozone and in the US, many central banks are still not fully aware that many economic activities are likely to decline in the near future,” he added.
He thinks the conflict in Ukraine will last longer than many forecast, and this is one of the headwinds for the global economy besides the supply chain crisis, inflation and high interest rates. .