In just three trading days, the market value of U.S. tech giants has shrunk by more than $1 trillion. Markets have generally sold off since the Federal Reserve raised its benchmark interest rate on Wednesday, but the tech sector has suffered more than other sectors. Apple, the world’s most valuable listed company, has lost $220 billion in value since the market closed last Wednesday.
On the same day, Federal Reserve Chairman Jerome Powell announced that U.S. inflation is too high, and there is no plan to raise interest rates by 75 basis points in one go. Markets first rallied on Powell’s remarks, but the optimism faded over the next few days. U.S. stocks have fallen sharply for three consecutive trading days since last Thursday.
The S&P 500 fell below the 4,000-point mark on Monday and has fallen 7% since the close of last Wednesday. In the same period, the Invesco Nasdaq 100 ETF fell nearly 10%.
Here’s a look at the market capitalization losses of other tech giants over the past three sessions:
- Microsoft has lost about $189 billion in market value;
- Tesla’s market value fell by $199 billion a few months after its market value fell below $1 trillion;
- Amazon loses $173 billion in market value;
- Google’s parent company Alphabet’s market value fell $123 billion from last week;
- Nvidia lost $85 billion in market value;
- Facebook parent company Meta Platforms has lost $70 billion in market value.
The Fed’s semi-annual Financial Stability Report on Monday warned that liquidity conditions in major financial markets have deteriorated due to rising risks from the Russian-Ukrainian war, monetary tightening and high inflation.
According to some indicators, liquidity in the newly issued U.S. spot Treasury bond market and equity index futures market has declined since late 2021,” the report said.
“While the recent deterioration in liquidity has not been as extreme as in some past periods, the risk of a sudden sharp deterioration appears to be higher than normal,” the report said. “Furthermore, since the Russia-Ukraine conflict, liquidity in the oil futures market has been somewhat strained at times, while markets in some of the other affected commodities have been markedly dysfunctional.”
In a press release accompanying the report, Fed Governor Brainard said the war “triggered price volatility and margin calls in commodity markets and underscored potential channels through which large financial institutions could be infected.”
“From a financial stability perspective, since most participants enter the commodity futures market through large banks or broker-dealers that are members of the relevant clearinghouses, when clients face unusually high margin calls, these clearinghouse members will At risk,” Brainard said. “The Fed is working with domestic and foreign regulators to better understand the exposures of commodity market participants and their linkages to the core financial system.”
The S&P 500 fell to its lowest level in more than a year on Monday and is now nearly 17% below its Jan. 3 record high. The fall in asset prices comes as central banks around the world, including the Federal Reserve, are tightening monetary policy sharply in response to persistent inflationary pressures.
“High U.S. inflation and rising interest rates could have a broader negative impact on domestic economic activity, asset prices, credit quality and financial conditions,” the report said. The report also warned U.S. home prices, where high valuations make them particularly sensitive to shocks.