Tuesday Tech Crash
Stocks looked like they were going to continue their uptrend on Tuesday after the sharp rally on Monday. The market was up in the morning, but then crashed in the afternoon. The S&P 500 was down 1.73% and the VIX was up 6.99% to 22.50. The biggest weakness was in tech as the Nasdaq was down 2.93%. The tech sector in the S&P 500 was down 3.47%. There were a few negative headlines which hurt the individual players. There was also broad based selling which occurred indiscriminately. Twitter stock was down 12% partially because Citron Research came out with a negative piece about Twitter profiting off its user’s data. The stock is down 23.3% in the past 2 weeks. This might just be a correction in the 156% rally in the past year. Ultimately, Twitter is still a company with slow user growth that is just trying to reach profitability after being in business for 10 years.
Nvidia stock was down 7.76% after the firm said it would suspend its self driving car program in lieu of the Uber accident. This was a bad day to have any negative headlines about a tech company because there was a wave of selling. Facebook stock renewed its downturn as it fell 4.9% on fears of regulatory action. Privacy concerns are also gaining steam as users become weary of being tracked. The stock is off 21.17% from its all-time high. It closed right at the low made on yesterday. It is technically important for it to hold that level on Wednesday. With data privacy in the news, there were stories about how Google has as much, if not more data than Facebook does. With the possibility of regulation on the way firms handle people’s data and the negative headlines on the nascent self driving car industry, Alphabet stock fell 4.47%. It is down 15.21% from its January high and is close to the low it made in February.
The chart below shows the FANG+ index had its worst decline in 3 years. Netflix stock was down 6.14% even though there weren’t any major negative headlines about the firm. Tesla stock isn’t in this index, but it’s one of the story tech stocks which trades on momentum. It fell 8.22% on news the National Transportation Safety Board will be investigating a fatal crash a Tesla was in last week. Tesla stock is down 21.89% from its all-time closing high in February as the market worries about Model 3 production delays. The firm’s debt was downgraded by Moody’s as speculative bond buyers are fleeing the name. Tesla is a firm which is highly dependent on financial conditions because it relies on issuing junk debt to stay afloat and invest in creating new products.
