Yahoo Finance Tech shares slump as Nasdaq enters correction territory
Technology companies including Apple and Tesla endured a continued sell-off on Monday as the Nasdaq traded more than 10pc below its February peak, a drop known as correction territory.
The Nasdaq Composite, the tech-heavy index of shares listed on the exchange, dropped 2.4pc to 12,609 on Monday as investors moved money out of tech companies on the prospect of higher interest rates and growing confidence about economic recoveries.
Tech shares have soared during the pandemic as people have turned to working from home and online entertainment. But the reality of economies reopening, a speedy vaccine programme and a massive Democrat stimulus package have raised confidence in other parts of the economy.
Shares in Zoom and Netflix were among the big losers on Monday, falling 7.9pc and 4.5pc. Tesla fell more than 5.8pc and has now lost more than a third of its value since a January high, while Apple, the world’s biggest publicly-traded company, dropped 4pc.
Tech shares have fallen in recent weeks not only on confidence about countries emerging from lockdowns, but the prospect of higher interest rates if a surge in post-pandemic economic growth and higher oil prices put pressure on inflation. Technology companies are often more exposed to inflation and interest rate fears since their valuations can be dependent on future earnings, which are worth less if rates or inflation increases.
The sell-off was disproportionately confined to tech companies, with the Dow Jones up almost 1pc and the S&P 500 dropping 0.5pc. The Nasdaq entering correction territory does not have any technical impact, but is seen as a sign of increasing jitters around stocks. It last saw a 10pc decline in September 2020.
