Concerns about inflation plagued the minds of investors as many sold off big tech stocks which, in turn, dragged down United States indexes for the second day in a row. As of the 4:00 pm close on Tuesday, the Dow Jones has gone down 1.36%, the Nasdaq down 0.09%, and the S&P 500 down 0.87%.
Big tech companies got hit the hardest from this selloff as Facebook dropped more than 4%, Amazon and Netflix both fell over 3%, and Alphabet, Inc (Google’s parent company) fell more than 2%. Technology stocks have gained a lot during the COVID-19 pandemic, but it looks like the reign is over as utility and consumer stocks saw big gains earlier in the week.
Adam Crisafulli, the founder of market commentator news site Vital Knowledge, called the tech selloff frustrating and the industry is “…seeing aggressive selling and accumulating technical damage as price breach key levels.”
Commodity Price Surge
The commodity surge is yet another thing that can be blamed on COVID-19 as the pandemic wrecked much of the world’s supply chains, and now that we’re in a recovery, the global industries are trying to gain back what they lost. Economists expect this price increase to be temporary, yet investors are worried that the banks could start to increase interest rates way sooner than previously thought.
The risks and effects of the pandemic are tragically not going away soon as the supply chains will struggle to recover and India’s record-breaking infection rates threaten important industries.
Job opening numbers have hit new heights as in March there were more than 8 million postings and yet employers have struggled to get those positions filled. Some, like the National Owners Association, put the blame on the unemployment benefits people were privy to and other kinds of government support under the pandemic.
Others like Saru Jayaraman, director of the Food Labor Research Center at the University of California Berkeley, said “this is not a worker shortage, this is a wage shortage” and called the restaurant business a “toxic workplace”.
The surge in commodity prices combined with the labor shortage has led to an unstable situation for workers and employers and caused investors to sell. This has been the worst day for the stock market since February 26 and the problems don’t stop there for the tech industry.
Lew Piantedosi, vice president and co-director of growth equity at Eaton Vance Management, listed out some of the obstacles the tech industry will have to face such as higher interest rates, corporate tax reform, and more antitrust attitudes.
Amazon and Netflix have managed to make somewhat of a comeback in the past day, and Palantir Technologies went up as well, jumping 9.4%.
Tech wasn’t the only industry with huge drops in recent times as pharmaceutical company Novavax had its shares drop 31% in two days. Inflation problems are starting to appear internationally as seen in Chinese factory-gate prices having gone up 0.9% in the past year.