Things keep getting worse for technology stocks – and that’s bad news for even the most diversified investors.
Société Générale data shows just six stocks – Apple, Amazon, Microsoft, Alphabet, Tesla and Meta – were responsible for one-third of the MSCI world index’s 19.5 per cent fall last year. The six largest US stocks at the start of 2022, they lost a combined $4.49 trillion (€42.3 trillion) in market value, notes Bespoke Investment.
Apple’s market value has fallen the most – it lost more than $1 trillion in market value, last week losing its status as the last company to boast a $2 trillion valuation.
Mega-cap tech stocks have long been integral to the S&P 500’s fortunes. Warren Pies of 3FourteenResearch notes that, over the past decade, US profit margins expanded by more than four percentage points, with almost all that expansion coming from the technology and communication services sectors.
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By the same token, S&P 500 profit margins fell more than two percentage points during the 2000-2002 bear market, with the technology sector responsible for all of this decline. The 2008 profit margin collapse tells a similar story, says Pies.
Little wonder, then, that investors of all hues will be closely watching tech stocks in coming weeks and months.
