Over $280 Billion Wiped from Tech Stocks Amid Earnings Reports
Around $280 billion has been lost from the market value of the top seven tech stocks, known as the “magnificent seven,” following the release of their earnings reports on October 25. This has raised concerns about a potential tech recession. The magnificent seven includes Apple, Microsoft, Meta (formerly Facebook), Amazon, Alphabet (Google’s parent company), Nvidia, and Tesla. These companies make up 25% of the S&P 500 index’s value.
Alphabet saw the biggest decline, with its share price dropping by over 9% and its market cap decreasing by $180 billion. This was Google’s worst-performing day since the start of the COVID-19 pandemic in March 2020. Other companies like Amazon, Nvidia, and Meta also experienced declines in their share prices.
Apple and Tesla had less severe drops in their share prices compared to the others, while Microsoft was the only one to see an increase in its share price due to better-than-expected growth in its Azure business.
The Kobeissi Letter described this tech selloff as the most widespread in months and suggested that it could be a sign that investors are starting to anticipate a recession. Fears of a stock market crash have also been reflected in increased Google searches for the term.
Cryptocurrency Market Trends Upward Amidst Tech Stock Decline
While tech stocks experienced losses, the cryptocurrency market has been trending upward due to optimism surrounding potential approvals for spot Bitcoin exchange-traded funds (ETFs) in the United States. The overall market cap of cryptocurrencies increased by 16.3% to reach $1.3 trillion in just one week.
Bitcoin, Ether, BNB (Binance Coin), and XRP (Ripple) have seen significant increases in value over the past seven days. Bitcoin, in particular, has increased by 23.3%, while Ether, BNB, and XRP have also experienced notable gains.
However, it is important to note that the crypto market is not immune to macroeconomic conditions. When the US gross domestic product (GDP) decreased in the first two quarters of 2022, the cryptocurrency market cap also experienced a significant decline. Additionally, research suggests that Bitcoin still tends to trade like a tech stock due to its volatility.
Despite this, Bitcoin has recently decoupled from the Nasdaq 100, showing a 34% increase while the Nasdaq has fallen by 8.6% during the same period. Some observers speculate that investors may be turning to Bitcoin as a safe haven asset amidst recent declines in banking stocks.
Hot Take: Tech Stock Decline vs. Cryptocurrency Market
The recent decline in tech stocks has raised concerns about a potential tech recession. The magnificent seven tech firms saw significant losses in their market value following the release of earnings reports. On the other hand, the cryptocurrency market has been trending upward due to optimism surrounding spot Bitcoin ETF approvals.
This contrast highlights how different investment sectors can experience divergent trends during uncertain times. While tech stocks face challenges, cryptocurrencies like Bitcoin have shown resilience and have even decoupled from traditional tech stocks.
As investors seek safe-haven assets and alternative investment opportunities, cryptocurrencies may continue to attract attention as a potential hedge against economic uncertainties.
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