US investors are avoiding tech stocks
High oil prices fuel inflation concerns
02/10/2023 11:26 p.m
Russia’s announcement that it will cut oil production from March is driving prices higher on Wall Street. Investors fear that inflation will rise as a result. This puts a strain on tech papers in particular.
Recent concerns about inflation and interest rates have once again weighed on US technology stocks. These fears were reinforced at the end of the week by sharply rising oil prices and robust economic data: consumer sentiment brightened more than expected in February. The consumer climate survey by the University of Michigan rose to its highest level in a year.
The tech-heavy one Nasdaq 100 fell 0.62 percent to 12,304.92 points. The standard stocks, on the other hand, have stabilized after their recent price losses. That’s how it went for the broad market S&P 500 by 0.22 percent to 4090.46 points. The leading index Dow Jones Industrial increased by 0.50 percent to 33,869.27 points. On a weekly basis, there is still a minus of 0.17 percent.
The announcement by Russia that it would cut oil production from March because of the upper price limit for Russian crude oil decided by the West, drove oil prices up and fueled inflation concerns. If prices rise significantly, investors ultimately fear that interest rates will continue to rise. Higher interest rates, in turn, tend to weigh on the stock market because it makes other asset classes more attractive.
Yields on the bond market had already increased noticeably before the weekend. Investors are now eagerly awaiting January’s inflation figures, which are due out next Tuesday. Technology stocks continued to be avoided, as their often high valuations are usually fueled by hopes of sizeable gains in the future. From today’s perspective, however, these are worth less with rising interest rates.
The carmaker’s shares Tesla and those of Nvidia lost a good five or almost five percent. With a price gain of currently 45.5 percent since the beginning of the year, the papers of the chip group 2023 have also been exceptionally strong so far. The topic of artificial intelligence inspired. The shares of the travel agent lyft collapsed by more than a third after quarterly figures and a disappointing outlook. In the United States, ride-sharing has almost completely recovered from the pandemic, but Lyft has not, wrote JPMorgan analyst Douglas Anmuth. The final quarter of Lyft was simply “forgetting”, the expert Brad Erickson from the Canadian bank RBC drew a sobering conclusion.
The shares of PayPal bucked the trend and gained 3 percent. The online payment service had grown significantly by the end of the year despite fears of inflation and recession. At the S&P end, the papers sagged news corp by almost ten percent. The group owned by the media entrepreneur Rupert Murdoch wants to cut 1,250 jobs this year. CEO Robert Thomson blamed acute inflation and rising interest rates for News Corp’s recent quarter revenue down 7 percent from the year-earlier quarter.
The Euro suffered from the robust US data and last traded at $1.0679. The European Central Bank had previously set the reference rate at 1.0690 (Thursday: 1.0771) dollars. The dollar thus cost 0.9355 (0.9284) euros. Against this backdrop, US government bonds also came under pressure. Most recently, the futures contract for ten-year bonds (T-Note Future) fell by 0.32 percent to 112.67 points. In contrast, the yield on ten-year government bonds rose to 3.75 percent.