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Nasdaq Heads for Biggest 2-Month Slump Since 2008 as Risks Pile Up

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February probably hasn’t felt like the shortest month of the year for investors in technology stocks, with constant volatility building on what was already the sector’s worst start to a year since 2016. And it looks like the month will end on another gloomy note Monday.

Risks piled up, as rampant inflation underlined expectations of higher interest rates and Russia’s invasion of Ukraine sent markets on a bumpy ride.

The Nasdaq 100 Index is down 13.7% this year, including a 0.7% drop on Monday. It is poised for its biggest two-month slump since 2008 and its first back-to-back monthly declines since late 2020.

bloomberg stock chart on tech stocks in 2022

Among notable superlatives for February, Tesla Inc. is poised for its biggest monthly drop in a year, while Apple Inc. is headed for the biggest since September. Meta Platforms Inc. is looking at its steepest monthly drop on record, down more than 30% in the wake of a catastrophic earnings report.

On Monday, Apple fell 0.6%, Microsoft lost 0.5%, Amazon.com slid 1.2%, Alphabet dropped 1.1%, and Meta declined 1.5%. Tesla rose 1.9%.

Bulls point out that better-than-forecast earnings plus the slump in stock prices means valuations are now more reasonable. And the Nasdaq 100 has held up well since the war started, gaining the past two sessions.

Yet the economic impact of the invasion remains unknown, and the Federal Reserve is still poised to raise interest rates.

“This is the most difficult environment we’ve had in years,” said Ted Mortonson, a technology strategist at Robert W. Baird & Co. “I don’t think the rate environment is fully factored in, and we are dealing with secular inflation, which makes this cycle different. Sentiment is somewhere between fear and panic right now, and I don’t think we’ve seen panic yet.”

bloomberg chart on tech stocks over the past few years

In a sign of how widespread the selloff is in U.S. stocks, more than 70% of the stocks in the Nasdaq Composite Index are now trading below their 200-day moving average, the highest such level since the peak of the pandemic selloff in 2020.

Top Tech Stories

  • Meta Platforms found and disabled a disinformation network that operated accounts, groups and pages targeting Ukraine across its social networks, the company said late Sunday.
  • A Chinese chipmaker, Fujian Jinhua Integrated Circuit, blacklisted by Washington as a technology thief more than three years ago, is finally getting a chance to prove it was wrongly accused.
  • YouTube will stop running advertisements on channels from Russian state-backed media and certain other accounts included in sanctions over Moscow’s invasion of Ukraine.
  • Twitter said it suspended all advertising in Russia and Ukraine, seeking to ensure that promotional posts don’t detract from public safety information sent via the social network.
  • Airbnb is offering free short-term housing for up to 100,000 Ukrainian refugees who are fleeing the Russian invasion and will work with neighboring European states to provide long-term stays.

(Updates to market open.)

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