Technology Stocks Head for Historic Wipeout as US Economy Cools

Skeptics have long made a sport of predicting that the decade-long rally in technology stocks was destined to reverse. At the halfway point of 2022, it seems like this is the year when they will be proven right.

The Nasdaq 100 Index has tumbled by almost a third this year, including a 0.9% drop on Thursday, erasing some $5.4 trillion in value in a selloff that has left few stocks unscathed. The benchmark, which gets half its value from tech, is on track for its biggest calendar-year decline ever.

And it’s hard to make a convincing case for a market recovery in the second half: Investors are pricing in further interest rate increases from the Federal Reserve as the central bank tries to combat inflation, sparking concern that the global economy will tip into recession. Analysts are beginning to cut earnings estimates for technology companies as a result.

“The issue is that we haven’t really seen inflation like this in decades,” said Michael Nell, a senior investment analyst and portfolio manager at UBS Asset Management. “Since 2009 or so we’ve had very low rates that contributed to the years of strength we saw. However, those low rates weren’t going to last forever.”

Here’s a look at the first half of the year for tech: