Technical shares plummeted, rising US bond yields and the technically compound Nasdaq index fell to its third 10% correction in the past year. What it could mean for the rest of the market?
Why it matters
The real economy and the labor market are still depressed. The deflationary market could slow down or halt the expected economic recovery. Technical shares have been very volatile in the last year, falling and rising much more than the rest of the market. Even companies as large as Apple see daily movements of around 3-4%. Last year, stocks and housing were supported by very low interest rates.
What you can hear
Excessive movements in stock prices in technology amplify the overall volatility of the market. All five largest US companies by market capitalization (Apple, Microsoft, Amazon, Alphabet and Facebook) together hold a capitalization of more than $ 8.2 trillion. That’s less than a quarter of the benchmark U.S. stock index, which is $ 33.9 trillion. Overall, the technology companies were hit by the sale. Previous world market leaders (Tesla, Zoom, Nvidia, Square and AMD) fell by 20%. In fact, Tesla fell 35% from its last record (January 26), losing almost a third of its value three times in the last year.
What it could mean
The pandemic has hit the economy hard, but recovery is still expected. However, with this fall and the volatility of technical shares, the recovery may be delayed. The high volatility of technical stocks causes higher volatility in the overall market, and this volatility could mean a slower economic recovery in the future as well as a slower return to normal life.
What you can do
During this period, it is definitely necessary to protect your wealth by all possible means. One way, for example, is to invest. If you would like to learn more about it, you will find the necessary information in our Platon Trading Academy, which will guide you through all the things you need to know to invest, whether you are a complete novice or have been investing for some time.