Technology stocks were battered on Wednesday, in one of the sector’s worst trading days of the year. It’s a familiar song the market was singing: fear of higher interest rates once again weighed on technology shares.
The market was hit by a double whammy. The downgrade of the U.S. government’s debt rating by Fitch late Tuesday, combined with a more robust than expected report on private-sector employment from ADP, both point to potentially higher interest rates. And as investors learned well in 2022, higher rates are bad for growth stocks generally, and tech businesses in particular.
The
Nasdaq Composite
was off about 2% Wednesday, underperforming the 1.2% decline by the
S&P 500
and the 0.9% slump by the
Dow Jones Industrial Average.
Very few tech shares were left out of the selloff.
The “Magnificent 7” tech companies—
Apple
(ticker: AAPL),
Microsoft
(MSFT),
Alphabet
(GOOGL),
Amazon.com
(AMZN),
Nvidia
(NVDA),
Meta Platforms
(META), and
Tesla
(TSLA), all slumped. Apple, which reports earnings on Thursday, held up reasonably well, down 1.2%. All of the others were down 2% or more, while Nvidia fell 4.5%.
There was profit-taking in the red-hot generative AI plays., with C3.AI down 10%, and
Palantir
(PLTR) off 5.5%.
Likewise, there was widespread selling in cloud and security software stocks.
Datadog
(DDOG) fell 6%, Elastic (ESTC) was off 7%,
Zscaler
(ZS) fell 7% and
CrowdStrike
(CRWD) dropped 6%.
Some investors sought refuge in this year’s tech underperformers. Stocks like
Juniper Networks
(JNPR),
eBay
(EBAY),
AT&T
(T),
IBM
(IBM), and Corning (GLW), all serious laggards this year, gained ground in the session.
Write to Eric J. Savitz at [email protected]
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