Why investors should hold off before buying into Big Tech's selloff
If you made it through this trading week and still have an appetite for the stock market, you should be commended for your Kevlar-lined stomach. Even after Friday's rally, Wall Street is firmly entrenched in bear market territory, and the tech sector correction has reached extreme levels. But just how bad has it been for Big Tech in 2022?
$2.5 trillion. That's not a typo, that 't' is where it’s supposed to be. That's the combined market cap value that Microsoft (MSFT), Apple (AAPL), Alphabet (GOOGL), Amazon.com (AMZN), and Tesla (TSLA) have shed year-to-date. Per the chart below curated by Schaeffer's Senior Market Strategist Chris Prybal, that Big Five now has a combined value approaching $7.5 trillion. On New Year's Eve, their combined value sat above $10 trillion.
Round numbers are always something to watch with market caps when it comes to support and resistance. AMZN has taken the sharpest haircut of the bunch but could hold above the $1 trillion level. Tesla has ceded said psychologically significant level. Microsoft is now under $2 trillion. GOOGL could hold $1.5 trillion as support. But these losses are not even within a six-month window. There's six more months of inflationary pressures, Fed rate hikes, gloomy earnings reports, and geopolitical headwinds to contend with. This may be the bottom, but it may not; that's speculation that isn't productive at the moment.
Subscribers to Chart of the Week received this commentary on Sunday, May 15.