Technology stocks are still falling after closing out their worst month of 2023

  • The Nasdaq fell 1.9% on Tuesday, accelerating a broader market decline sparked by fears of higher interest rates.
  • Airbnb shares fell 6.5% after analysts at KeyBanc lowered their rating on the stock.
  • Among large-cap companies, Amazon saw the biggest decline, with the stock falling 3.7%.

Leonardo Munoz | View Press | Corbis News | Getty Images

Technology stocks are following their worst month of the year with a rocky start to October, as a rise in interest rates prompts investors to turn away from risky assets.

The Nasdaq fell 1.9% on Tuesday to close at 13,059.47. The technology-heavy index fell 5.8% in September. While still up 25% this year, the Nasdaq is trading at its lowest level since May.

Airbnb shares fell 6.5%, their second largest decline this year, after analysts at KeyBanc downgraded the stock to the equivalent of hold from buy. The company lowered its revised earnings forecast through 2025 as consumers shift to buying more physical goods.

“Our call is that leisure travel saw a material recovery in 2021-2023E, leading to significant margin expansion,” the analysts wrote. “As these tailwinds fade, growth in room nights and experiences as well as the company’s average daily rate could take a hit,” they continued.

Like most tech stocks that were seen as growth engines during the Covid-19 pandemic, Airbnb soared in 2021 — just after its Nasdaq debut — then sank last year. It has rebounded again in 2023 but rising interest rates, ongoing concerns about rising energy prices and the possibility of a recession have led investors to turn away from the stock recently.

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Higher bond yields provide money managers with opportunities to make money from fixed income while increasing borrowing costs for consumers.

The 10-year Treasury yield was trading at 4.8%, hitting its highest level in 16 years on Tuesday. The benchmark yield rose last month as the Federal Reserve pledged to keep interest rates at a higher level for longer. The 30-year Treasury yield also rose to its highest levels since 2007.

Among Big Tech stocks, Amazon suffered the biggest decline, falling 3.7% to $124.72. Amazon is coming off its worst month since February as the company faces the prospect of a disappointing holiday shopping season and a massive antitrust lawsuit from the Federal Trade Commission.

Microsoft shares fell 2.6%, and Meta shares fell 1.9%.

He watches: Why the FTC’s antitrust case against Amazon may be changed

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