X

This is not a paywall.

Register for free to continue reading.

The news sucks. But your reading experience doesn't have to. Help us improve that for you by registering for free.



Please create a password or click to receive a login link.


Please enter your password or get a login link if you’ve forgotten


Open Sesame! Thanks for registering.

First Thing, Daily Maverick's flagship newsletter

Join the 230 000 South Africans who read First Thing newsletter.

We'd like our readers to start paying for Daily Maverick

More specifically, we'd like those who can afford to pay to start paying. What it comes down to is whether or not you value Daily Maverick. Think of us in terms of your daily cappuccino from your favourite coffee shop. It costs around R35. That’s R1,050 per month on frothy milk. Don’t get us wrong, we’re almost exclusively fuelled by coffee. BUT maybe R200 of that R1,050 could go to the journalism that’s fighting for the country?

We don’t dictate how much we’d like our readers to contribute. After all, how much you value our work is subjective (and frankly, every amount helps). At R200, you get it back in Uber Eats and ride vouchers every month, but that’s just a suggestion. A little less than a week’s worth of cappuccinos.

We can't survive on hope and our own determination. Our country is going to be considerably worse off if we don’t have a strong, sustainable news media. If you’re rejigging your budgets, and it comes to choosing between frothy milk and Daily Maverick, we hope you might reconsider that cappuccino.

We need your help. And we’re not ashamed to ask for it.

Our mission is to Defend Truth. Join Maverick Insider.

Support Daily Maverick→
Payment options

Nasdaq 100 Futures Point to First Bear Market Since Mar...

Business Maverick

Business Maverick

Nasdaq 100 Futures Point to First Bear Market Since March 2020

Stock market information at the Nasdaq MarketSite in New York, U.S. Photographer: Michael Nagle/Bloomberg
By Bloomberg
24 Feb 2022 0

Futures tracking the Nasdaq 100 Index signal the equity gauge is poised to fall into a bear market in the U.S. on Thursday for the first time since the depths of the pandemic selloff.

March futures tracking the technology-heavy index slid as much as 2.8% after TASS reported on Thursday that Vladimir Putin decided to conduct a special operation to “protect” the Donbas region of Ukraine. Putin said Russia doesn’t plan to occupy Ukraine, while urging Ukrainian forces to put down their arms and go home, the report said. S&P 500 futures dropped as much as 2.3%.

Home to Apple Inc., Amazon.com Inc. and other technology behemoths, the Nasdaq 100 has shed about 18% since notching its Nov. 19 closing record amid skyrocketing inflation, disappointing earnings and the prospect of conflict. The losses come as investors grapple with a double whammy for the sector in rising interest rates, which chip away at the value of future earnings, and slowing growth for the handful of companies that have driven the bull run in U.S. stocks in recent years.

The broader Nasdaq Composite Index is also teetering on the brink of bear territory — measured as a decline of 20% or more for a stock index from a recent high.

Read more: Speculative Stocks Lead Drop as Investors Flee Profitless Tech

Yields have soared on the prospect that the Federal Reserve will start withdrawing the massive monetary stimulus that has supported the U.S. financial system since the pandemic hit. Policymakers are fighting the largest consumer price spikes in a generation, but investors are dumping tech and growth stocks, whose valuations ballooned during the pandemic, as borrowing costs rise.

At the same time, investors are grappling with geopolitical tensions in Russia, which threaten to disrupt global oil markets and send energy prices higher, further stoking inflation.

“Growth stocks had gotten incredibly loved and overvalued. There was a feeling of intense speculation like with the tech bubble,” Eric Diton, president and managing director of The Wealth Alliance, said in an interview. “Now there’s a big inflation issue, supply chain problems and a potential Russia-Ukraine war weighing on investors. Throw that into a backdrop of high valuations and intense speculation, then all of the sudden we’ve got some serious headwinds.”

Nasdaq 100 on track to fall into a bear market for first time since March 2020

Problems have been brewing since the start of the year with more than a third of the stocks in the Nasdaq 100, which represents the exchange’s largest non-financial companies, down at least 50% from their 52-week highs by just the second week of January. Meanwhile, the percentage of stocks on the Nasdaq Composite that set new 52-week highs stood at just 1% on Wednesday.

Wild Swings

Big Tech has delivered stomach-churning swings with the wildest volatility since the pandemic shuttered the U.S. economy in 2020. At one point this month, Facebook parent Meta Platforms Inc. posted the worst one-day drop in market value in stock-market history while Amazon.com Inc. posted the biggest single-day gain in market capitalization in U.S. history.

Shares of smaller, fast-growing tech companies have been especially hurt by concerns that they would be more vulnerable to tighter monetary policy since they are more reliant on capital markets for financing rather than incredible riches that have helped some founders skyrocket to the moon.

U.S. tech companies may face further pain as investors swap growth stocks for energy, financials and other cyclical shares that historically have benefited from improving economic growth and higher rates. The shifts likely represent a rebalancing away from the atypical conditions that have persisted for more than a decade and helped create a cadre of trillion-dollar companies dominating stock indexes.

“It’s more surprising what happened before this year in terms of the intense speculation and valuation,” Diton added. “This year will be a transition toward normalcy. Supply chain issues will work themselves out in the second half of the year. And interest rates will go from ridiculous lows to something more normal.”

Gallery

Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

No Comments, yet

Please peer review 3 community comments before your comment can be posted