![]() Google, Apple and Microsoft have reportedly halted hiring. The looming warning comes as several large tech firms have announced hiring cuts. Even Amazon founder Jeff Bezos spoke out in a warning that the party days of rapid pandemic growth will be ending soon. ![]() Companies like Netflix and Peloton grew rapidly due to both factors, while companies like Uber suffered during the pandemic but also benefitted from a decade of low-interest rates and huge VC investment.”īut this Covid boom appears to be ending drastically. “These included historically low-interest rates and, more recently, the Covid-19 pandemic. Laura Petrone, principal analyst at GlobalData, told Verdict: “Over recent years, the tech market has grown thanks to exceptional and hard-to-replicate conditions. It has fallen to $9.Russia’s unjust invasion of Ukraine, the end of the pandemic, the threat of incoming regulation and increasingly high-interest rates have all exacerbated the situation. The tool of the "offense," the Robin Hood app, which provides a very easy commission-free way of investing in the stock market, was worth $85 when it went public in early 2021. They bought trendy stocks, dispensing with advice on social networks today, the names most quoted on Twitter are those that are undergoing the sharpest continued decline. During the sanitary crisis, taking advantage of the financial windfall – maintained income combined with the inability to consume – Americans rushed to the stock market, often confusing it with a casino, according to the criticism by billionaire Warren Buffett. Trendy titles, the "memes," are particularly affected. Logically, "lockdown shares," the object of all the speculation, have crashed and will not recover: Zoom shares (video conferencing app) have fallen from a high of $591 at the end of 2020 to $90 the share value of Moderna (vaccines) has been divided by three, Netflix by four and Peloton exercise bikes by 13. Nasdaq is still 5% above its October 2020 level, immediately before the discovery of the Covid-19 vaccines, and still gained 20% compared to its pre-pandemic level. In fact, the correction is relatively modest at this point. This would mean another stock market debacle. If prices continue to rise, rates may have to rise above inflation excluding energy and food, which is above 6.5%. Is the correction coming to an end? Everything will depend on the evolution of long-term rates, which are themselves linked to price increases. ![]() 10-year yields, which fell to 0.5% in July 2020, bounced back to 3.2% on May 9, resulting in the worst day in two years for the stock market. Those days, which revived inflation, are over. Stocks had soared with free money being distributed by central banks and governments. The higher the interest rates, the lower the value of future corporate profits. Wall Street is rediscovering an iron rule: Stock value is directly correlated to interest rates. And there are plenty of bad news on the horizon, from lockdown in China, to the war in Ukraine, to bottlenecks in the economy and labor shortages, which are hampering a healthy recovery. The Federal Reserve (Fed), the American central bank, had to raise its rates to counter an inflation of about 8.5%, unheard of since 1981. The current situation is not so very different. That is not a sure bet, as Wall Street, for example, continued its downward slide in 1974 (-30% for the year), following the first oil crisis, when the world discovered stagflation. Traders are trying to find comfort in the fact that in such cases the stock market rebounds. This index has had its worst annual start since 1932. The technology-rich Nasdaq index has lost 25% since the beginning of 2022, while the S&P 500 is down 16%. SHANNON STAPLETON / REUTERSĪ better-than-expected inflation figure in April may give the markets some breathing room, but the trend remains: Wall Street is experiencing a sharp decline, reminiscent of the Tech bubble burst in 2000. Subscribers only Artist Kristen Visbal's Fearless Girl statue stands draped in the flag of Ukraine after a protest outside the New York Stock Exchange on May 4, 2022. Companies that had benefited from the lockdowns are collapsing.īy Arnaud Leparmentier (New-York (United States) correspondent) Published on May 12, 2022, at 8:05 pm (Paris), updated on May 12, 2022, at 8:05 pm War in Ukraine, inflation and rising interest rates have caused indexes in the US to plunge since January. Wall Street's slide continues, reminiscent of the Tech bubble burst
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