Tech Stocks Today: What Just Happened in the Market?
Tech stocks finally tumbled yesterday. Is this a mere blip in the tech sector boom, or is it pointing to a tech stock market correction? And what will happen to tech stocks today? Is it still a good time to invest in tech stocks?
These are all good questions that savvy investors should be asking themselves. In the end, nobody knows for sure what’s in the future for tech stocks.
But just because there was a dip in tech stocks today doesn’t mean they’re not still a great investment for the future. Let’s dive into some details now.
What Happened to Tech Stocks Yesterday?
The stock market took a tumble yesterday, largely driven by tech stocks.
But of course, just because something major happened yesterday doesn’t mean the trend will continue with tech stocks today.
Let’s take a look at how the overall stock market dropped yesterday:
- The Dow Jones Industrial Average dropped 807.77, or 2.78%.
- The S&P 500 dropped 125.78, or 3.51%.
- The Nasdaq dropped 598.34, or 4.96%.
These are some pretty significant numbers. And the fact that the tech-heavy Nasdaq declined by the largest percentage indicates the pullback in the tech sector. Stocks like Amazon (Nasdaq: AMZN), Apple (Nasdaq: AAPL), Alphabet (Nasdaq: GOOG), Microsoft (Nasdaq: MSFT) and Facebook (Nasdaq: FB) all saw large declines in a tech market that has been heavily bullish as of late.
So was this mere profit taking? Or is this a sign of some underlying fundamental problems with tech stocks? Plus, what does it mean for the future? Should you invest in tech stocks today, or is this the beginning of a trend?
Why Is This Happening?
Before today, the tech sector seemed impervious to the events of COVID-19 and the resulting economic problems. But tech stocks today have shown that they are not so impervious after all.
There are different theories as to why they may have suddenly taken such a plunge. Generally, these stocks have been top performers, but some analysts have speculated that stock prices have diverged too far from the underlying fundamental values of the companies.
Of course, it’s also possible that what we saw in the markets today is more reflective of broader economic concerns related to COVID-19.
But there may be some good news on that front: Economists are expecting to see 1.35 million payrolls added for an unemployment rate that will finally tick below 10% for the first time in months.
There may be some additional factors also motivating the sell-off, though. For example, as politics continue to heat up and we get closer to a contentious U.S. presidential election, fears of increased antitrust and regulatory action may be increasing.
But still, there’s no evidence to support that this triggered the sudden pullback of tech stocks today.
Are Tech Stocks Still a Good Investment Today?
It’s certainly fair to wonder whether tech stocks are still a good investment. On the one hand, we now know that tech stocks are not impervious to declines in 2020.
Apparently, tech kryptonite does exist.
On the other hand, one could argue that if they were a great investment two days ago, tech stocks are now an even better investment today. After all, cheap tech stocks – or at least cheaper ones – are now in higher supply.
The truth is, nothing fundamental has really changed for the best tech stocks between two days ago and today. Prominent companies like Apple and Facebook were great companies before, and they’re great companies now. And they just got significantly cheaper.
Take a quick look at these percentage declines:
- Apple: -8.01%
- Amazon: -4.6%
- Alphabet: -5%
- Facebook: -3.8%
- Netflix (Nasdaq: NFLX): -4.9%.
If you’re looking at the short term, you may want to be cautious about playing these stocks. Nobody has a crystal ball and nobody can see for sure what will happen in the coming weeks or even months.
But if you are looking to invest for the long term, you may be looking at a great opportunity to invest in tech stocks today.
Concluding Thoughts on Tech Stocks Today
After declining more than 5% yesterday, it is hard to say what will happen to tech stocks today. On the one hand, they could continue to plunge if the markets head toward correction territory. On the other hand, they could handily rebound and investors could see some nice gains.
And the decline of tech stocks could even create some interesting opportunities in some other areas. For example, despite the fact that cruise stocks have been absolutely hammered during COVID-19, Carnival Corp. (NYSE: CCL) was up 5.2% on the day yesterday, while Macy’s Inc. (NYSE: M) was up a very nice 7.94% despite all of the struggles in retail these days.
It’s impossible to know for sure what will happen with tech stocks in the short term. So try to ignore most of the noise and decide whether you think, in the long term, big tech is still a smart play. If it is, then it might be a great opportunity to go shopping for some tech stocks today.
About Brian M. Reiser
Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.
He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.
His primary interests at Investment U include personal finance, debt, tech stocks and more.