Stock Market Slump Erases $1.5 Trillion in Value for Pandemic Gainers
The global stock market rout on Monday wiped out $1.5 trillion in value for companies that had soared during the pandemic.
The Nasdaq Composite Index, which is heavily weighted towards tech stocks, tumbled 4.9%, its worst day since March 2020. The S&P 500 Index, a broader measure of the U.S. stock market, fell 3.6%.
The sell-off was driven by a combination of factors, including rising interest rates, concerns about slowing economic growth, and geopolitical uncertainty.
The market is in a risk-off mode, said Keith Lerner, chief market strategist at Truist Advisory Services. Investors are worried about the Fed raising rates, the war in Ukraine, and the possibility of a recession.
The pandemic had been a boon for many tech stocks, as stay-at-home orders and remote work boosted demand for their products and services. However, as the economy reopens and interest rates rise, investors are rotating out of tech stocks and into more defensive sectors, such as consumer staples and utilities.
Some of the biggest losers on Monday were pandemic winners such as Zoom Video Communications, which plunged 16.7%, and Peloton Interactive, which fell 11.3%.
The sell-off is a reminder that even the most successful companies can be vulnerable to market downturns. Investors should be aware of the risks involved in investing in any stock, and they should diversify their portfolios accordingly.
What’s next?
It is unclear how long the stock market sell-off will last. However, investors should be prepared for further volatility in the coming weeks and months.
We are in a choppy market, said Lerner. Investors should buckle up and be prepared for some more turbulence.
Here are some tips for investors:
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