Tech Stocks Are Falling. That’s A Bad Sign For The Economy

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This week, analysts will turn their attention to a host of smaller tech companies for a deeper reading of the economic forecast.

ith a slew of technology companies reporting financial results this week, all eyes are on how investors will respond after a series of recent disappointing results from the biggest names in tech—including Alphabet, Microsoft, Meta, and Amazon—rattled investors about the industry’s outlook.

“In this softer macro and a recession likely on the doorstep, Big Tech management teams needs to quickly adjust to a much different backdrop or risks losing its luster for investors that have bet on these tech thoroughbreds for the past decade,” he said. The Federal Reserve last raised interest rates in September by 75 basis points, which means consumers will pay more for interest on vehicle financing and other loans. Analysts say the swift rise in interest rates has forced investors to rethink whether stocks that flourished in an environment with low interest rates would be able to continue to succeed in an environment with higher interest rates.

Microsoft, which is down 1.59% at closing on Monday, reported its weakest quarterly revenue growth in five years, throttled by rising energy costs and a slump in sales of Windows software to personal-computer makers. Sales growth in its cloud business was also lower than analysts had hoped. Amazon shares plunged 7% on Friday after the company predicted weaker holiday sales than analysts had expected. The company’s cloud business also“When we’re getting these kinds of declines, it’s a clear signal that the economy is slowing down,” says Bowersock Hill. “The fact that Big Tech earnings are coming in worse than expected is a big indicator about the broader economy.”Despite the uncertainty around Big Tech stocks, the overall economy isn’t in terrible shape.

 

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Investors are placing money wiser. That's good keeping pace in an inflation economy. No more housing bubbles!

Tech stocks are ridiculously overvalued. Look how overvalued Facebook/Meta was. A lot of tech is similarly pointlessly bloated.

Just for rich people. The economy and the stock market are two different things. Most of the US is too poor to own any stocks. If you own some, Congrats, you are not struggling to eat or pay the bills

Nah, just for those who are shorting them.

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