Shulou(Shulou.com)11/24 Report--

December 16 (Xinhua)-- this is the year in which the soaring stock prices of large American technology companies have been broken, and these companies have lost their strong market leadership for many years.

According to foreign media reports, the shares of big technology companies such as Amazon, Alphabet, Tesla, Nvidia and Meta have lost 1/3 or more of their market capitalization this year. Based on Thursday's closing price, the technology-heavy Nasdaq 100 index fell 29%, wiping out nearly $5.6 trillion in market capitalization. The s & p 500 tech index fell 2% on the day and is down 23% so far this year.

Rising inflation and interest rates have affected the conditions that have driven sustained growth in the technology industry for years, increasing the likelihood of a recession in the United States in 2023.

"this is the first significant decline in the fundamentals of a large technology company in five to 10 years," said Justin Kelly, chief executive of Winslow Capital Management. "this is a major change in the long-term outlook of these companies and why they are no longer market leaders."

The economic situation in the United States at the end of 2022 is more severe than it was a year ago. High inflation has been a major theme this year, and the Fed has been trying to contain it by raising interest rates sharply.

Yields on 10-year Treasuries are likely to more than double by the end of 2022, while the dollar index is on track for its biggest one-year gain since 2015. Both factors are bad for the fast-growing, highly valued major companies in the Nasdaq 100.

Despite recent reports that inflationary pressures are beginning to ease, Jerome Powell, Fed chairman, said on Wednesday that the Fed's far-reaching efforts to reduce inflation were far from over.

This economic situation has made the technological trend of US technology stocks continue for a long time in 2022. The Nasdaq 100 has never closed above its 200-day moving average since April, the longest in 20 years.

The sell-off by investors affects the importance of so-called FAANG companies in the market, including Facebook parent companies Meta, Amazon, Apple and streaming company Netflix. Google's parent company, Alphabet, currently weighs about 13% of the s & p 500, the lowest level in more than two years. This is down from a record 19 per cent in 2020.

Although large conglomerates are popular in US financial markets, history shows that market leaders of one era almost never dominate the next.

"Technology stocks have been outperforming the market over the past decade," said Keith Lerner, co-chief investment officer of Truist Advisory Services, a market information firm. "every time technology stocks fall, investors buy at bargain prices and end up making a profit. it takes time for things to improve." Lerner believes that "above-average valuations and weak earnings momentum" are the reasons for the underweighting of the technology industry.

So far this year, 13 companies in the S & P have lost more than $100 billion in market value, a record high, 12 of which are technology companies. Of this total, Amazon lost $756.7 billion, Alphabet lost $689.7 billion and Meta lost $616.8 billion. In addition, 13 companies include Apple, Tesla, Microsoft, Nvidia and Netflix.

If you factor in the performance in the last two weeks of December, companies with market capitalization losses of more than $100 billion could also include Intel and Accenture, both of which have lost about $90 billion this year.

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