On Tuesday stock market showed a steady opening, and prices of some of the biggest companies were down as the trade closed for the day.
The stock market, which saw a rapid flurry in prices of some big stocks the previous day, was sluggish today.
Looming concerns about high-interest rates and inflation have kicked the bulls and brought the whole market down.
Some of the U.S Biggest Indexes Struggled to Gain
Starting with S&P 500, the index fell by 0.40% and closed at 3,824.14.
Talk of the Dow Jones index, it closed the day with a decline of 10.89 points. This accounts for a 0.03% slump in the overall index.
On the flip side, Nasdaq Stock Exchange declined by 0.76% and closed at 10,386.99 indexes. Most notably, the price of Boeing stocks suffered. The shares of tech companies Tesla (TSLA) and Apple both suffered losses.
Technology Sector Carried the 2022 Trend in 2023
2023 has just started, but the price of tech stocks is already down as Tesla and Apple failed to make their mark. Even in 2022, the energy and tech sectors have suffered more than any other.
As the market factors shook the technology sector, the U.S. Federal Bank immediately raised the interest rate to fight hyperinflation.
The price of Tesla shares dropped by 12.24%, and the cost of Apple shares fell by 3.74% back in 2022.
The real reason behind the decline in Apple’s share is the same. Amid China’s Covid-19 troubles, Apple’s manufacturing in China has been severely disturbed.
The rumor that Apple’s product supply might fall shorter has left the company’s shares vulnerable.
The current situation indicates that the tech sector might replicate the same pattern in 2023 because the central bank will likely raise the policy rate in the coming few months.
U.S. officials are skeptical of the economy entering into recession once more. That is why they have no other option but to increase the interest rate.
These worries can be damaging to the stocks of technology companies. The reason is simple after suffering from sustained losses in 2022. Investors do not have the power to tolerate further losses.
That’s why in 2023, investors will only invest in those companies which will offer greater value. “High return on investment will be the only goal for investors,” said Greg Bassuk, the CEO of AXS Investments.
Netflix is Perfectly Positioned to Experience a Price Hike
As the recession talks have become more intense, IT companies are becoming increasingly vulnerable. But unlike all the other tech companies, Netflix is perfectly positioned for the price hike.
Netflix’s new offer has been a catalyst in the recent surge in the platform’s subscriptions. It has announced that ad offerings while streaming its content will be taken off slowly. People have welcomed this new announcement. This has given much-needed momentum to Netflix’s share.
But CNBC’s technology experts believe that the overall growth of the technology sector will remain sluggish throughout the year.
Only Three Sectors Have Performed Well on S&P 500
As trading activities wrapped up in 2023. The market adopted a similar pattern in 2022. Only three sectors managed to gain some momentum.
Talk of S&P 500, communications, non-energy raw material, and commercial services sectors was among the biggest performers.
Regarding the communication sector, Verizon, AT&T, and Lumina were the best-performing stocks in the market.
On the other hand, PayPal, Meta, and Newell-Brands were the best-performing commercial services sector companies.
Talking about the situation, Goldman Sachs experts said that the U.S. policymakers would go all out to avoid the recession in 2023.
They also added that if the energy crisis and Russia’s Ukraine invasion are prolonged, the global economy can suffer from another hyperinflation cycle.
Experts also advised investors to avoid the technology and energy sector. These are two of the highly sensitive sectors to invest in.
As long as the current economic dynamics are not settled, investment in IT and power sector companies is highly risky.