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Another nightmare day in the US equity markets, with sharp declines. Leading the way are tech companies, the ones that fell the most yesterday.
After yesterday’s correction, the companies grouped under the acronym FANGMAN, that is, Facebook, Apple, Netflix, Google, Microsoft, Amazon and Nvidia, have lost 500,000 million dollars in capitalization. That is, twice the GDP of Romania, erased in one day. And today the Nasdaq index had lost another 5% in the first part of the session.
Technology is declining because the market realizes that it is actually overvalued. The technology component of the S&P 500 index rose 70% from its low on March 23. The overall index increased by approximately 30%.
An hour ago, Apple was down 8%. Facebook lost 6.6%. Amazon also fell 7.4%.
After those sustained increases, some normal corrections occur. They had risen too high and now investors are making a profit. Before these declines began, the value of Tesla had risen a thousand percent in 12 months.
Apple and Tesla, which made splits of shares, experienced strong increases in value only from this operation, which only makes the title more accessible to investors, practically nothing fundamental changes. And those increases are irrational.
And, in principle, the day could be good. An encouraging report came from the labor market, a decent number of jobs recovered in August, 14 million, and the unemployment rate fell well below 10%, to 8.4%. In fact, this good data kept the market pre-open and slightly better open. When theyou starting transactions, however to income decreases, Chas produced effects on meEurope, on the stock exchanges that were at the end of the day. The Europeans had held up well during the day, in the green, but were dispatched in the red when AMerica lowered it.
There were some signs there too – the VIX volatility index has some 10 days since he grew up. And volatilitya it can be accentuated because the US elections are approaching, on November 3. May They are two months and when a close result is expected, nervousness and mood increasesa it can change multiple times along the way, which can lead to increases, decreases, and all kinds of mix-ups where you don’t really understand a clear picture.
In 2016 there was volatility, and now, when things are even less clear, it can be even more so. And this year the uncertainty may drag on. Difficulties voting by mail can delay the announcement of the result and delays causes nervousness in financial markets.
Web Editor: Monica Bonea
