cryptoIn a surprising turn of events, the world of technology saw one of its most significant sell-offs in recent times as seven major tech giants collectively lost a staggering $280 billion in market capitalization. This downturn, triggered by the release of earnings reports has sent shockwaves through the stock market and raised concerns about the possibility of an impending tech recession.
The “magnificent seven” tech companies in question, comprising Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia, and Tesla, collectively represent a quarter of the S&P 500 index’s value. Google’s parent company, Alphabet, bore the brunt of the sell-off, with its share price plummeting by over 9%, resulting in a loss of $180 billion from its market capitalization. This marked Alphabet’s worst-performing day since the onset of the COVID-19 pandemic in March 2020.
Other notable declines among the “magnificent seven” included Amazon, Nvidia, and Meta, with their share prices dropping by 5.5%, 4.3%, and 4.2%, respectively, according to Y Charts. Apple and Tesla experienced milder declines, with their share prices falling by 1.35% and 1.9%, respectively. Surprisingly, Microsoft was the outlier, bucking the trend with a 3.1% increase in its share price after reporting better-than-expected growth in its Azure business.
This widespread tech selloff has left its mark on the stock market, pushing the S&P 500 to a five-month low. Analysts and experts in the field are now speculating whether this could be a sign of a tech recession looming on the horizon.
Crypto market resilience and potential decoupling from tech stocks
“This is the most widespread tech selloff in months which has resulted in a 5-month low for the S&P 500,” noted financial expert Kobeissi. The firm also commented on the situation, stating that this downturn might indicate tech stock investors beginning to factor in the possibility of an economic recession. “It seems like buyers are becoming more hesitant as headwinds accumulate,” Kobeissi added.
Google search trends have also reflected concerns about a “stock market crash,” with a 233% increase in searches for this three-word term over the past week, as reported by Andrew Lokenauth, a correspondent for TheFinanceNewsletter.com.
In stark contrast to the tech stock turmoil, the cryptocurrency market has been on an upward trajectory. Optimism surrounding potential spot Bitcoin ETF approvals in the United States has driven the cryptocurrency market cap to increase by 16.3% to reach $1.3 trillion in just one week, according to CoinGecko.
Leading the charge are Bitcoin (BTC), Ether (ETH), Binance Coin (BNB), and other cryptocurrencies, with gains of 23.3%, 16.7%, 8%, and 15.2%, respectively, over the past seven days.
While the cryptocurrency market has demonstrated its resilience, it is not entirely immune to challenging macroeconomic conditions. When the United States saw a decrease in its real gross domestic product over the first two quarters of 2022, the cryptocurrency market cap suffered a significant setback, plummeting by 61.7% from $2.37 trillion to $907 billion, as reported by CoinGecko.
Analysts are now debating whether Bitcoin will further decouple from tech stocks and the S&P 500. Research from the Multidisciplinary Digital Publishing Institute suggests that Bitcoin still tends to exhibit characteristics of a “tech stock” over the long term, owing to its extreme volatility. However, the same research also suggests that Bitcoin can serve as a viable hedge against the U.S. dollar, given its negative correlation with the currency.
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