Tag stocks sag on enhanced u s rate hike prospects

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Tag Stocks Sag on Enhanced US Rate Hike Prospects

Major technology stocks, including Facebook, Amazon, and Google, took a hit on Wall Street on Friday as investors grew increasingly concerned about the likelihood of a more aggressive interest rate hike by the US Federal Reserve.

The Fed's latest economic projections, released on Wednesday, showed a higher probability of a rate hike in the coming months, sparking a sell-off in the tech-heavy Nasdaq composite index. The index fell 1.4% to 12,555.25, its biggest one-day decline since June.

Facebook, Amazon, and Google, which are among the most widely held stocks in the Nasdaq, all declined by more than 2% on the day. Facebook fell 2.5% to $275.50, Amazon dropped 2.2% to $1,844.50, and Google slid 2.1% to $1,444.50.

The sell-off was also fueled by concerns about the impact of higher interest rates on the tech sector, which has been a key driver of the market's gains in recent years. Higher rates can make borrowing more expensive, which can hurt companies that rely heavily on debt to fund their operations.

"The Fed's hawkish stance is a major concern for the tech sector, which is heavily reliant on cheap capital," said Michael Antonelli, a market strategist at Robert W. Baird. "If rates rise too quickly, it could put a damper on the sector's growth prospects."

The yield on the 10-year US Treasury note, which moves inversely to the price of bonds, rose to 2.95%, its highest level since 2018. The yield curve, which measures the difference between short-term and long-term interest rates, also steepened, a sign that investors are becoming more concerned about the economy's growth prospects.

The Dow Jones Industrial Average, which is more heavily weighted towards financial and industrial stocks, fell 0.8% to 25,512.50. The S&P 500 index, which tracks the performance of the broader market, declined 1.1% to 2,853.50.

Despite the sell-off, many analysts remain optimistic about the tech sector's long-term prospects, citing its strong fundamentals and the potential for continued growth in areas such as cloud computing, artificial intelligence, and cybersecurity.

"We believe that the tech sector's growth prospects remain strong, and that the recent sell-off presents a buying opportunity for investors," said Dan Ives, a managing director at Wedbush Securities. "The sector's fundamentals are still intact, and we expect it to continue to drive growth in the economy."