Technology stocks started off the year 2024 with a plunge across the global markets on Sunday. Tech giants such as Apple, Microsoft and Google experienced a sharp decline in share prices. The drops extended to other tech companies like Twitter, Facebook and Amazon.
The market sell-off, which began on Sunday morning, saw the tech-heavy Nasdaq Composite Index drop 6.8% to 13,394.86. The Dow Jones Industrial Average was down 6.5%, while US Treasury yields dropped as investors sought safety.
The sudden declines came during a turbulent start to the year. The COVID-19 pandemic continued to disrupt the global economy, spurring fears of a double-dip recession. While the effect of the coronavirus pandemic is waning in some parts of the world, concerns about economic recovery remain.
Meanwhile, the recent decline in tech stocks has been linked to a slew of problems including slowing customer demand, escalating competition, diminishing profit margins, and regulatory scrutiny.
Fears of rising inflation have also weighed on tech stocks as the US Federal Reserve prepares to raise interest rates. The central bank has indicated that it may begin to taper its bond purchases in the second half of the year.
At the same time, new technologies such as artificial intelligence have created uncertainty in the market. Investors are worried about how these technologies will affect the leading tech giants, and whether new entrants will disrupt the industry.
The continued drop in tech shares will likely have a ripple effect on the global economy. This could further reduce investor confidence and trigger an economic slowdown.
It remains to be seen how the markets will behave in the days ahead. One thing is certain, however: As the year progresses, tech stocks will need to overcome these challenges if they are to recover in 2024.