The technology sector, which is the biggest contributor of the nine-year bull market and the Trump rally, has been caught in vicious trading over the past month. This was primarily due to the huge decline in large-capitalization technology and Internet stocks, as a result of a slew of negative news from some of the key companies in the space.
The initial panic was triggered on Mar 19 when data analytics firm Cambridge Analytica revealed data breach of more than 50 million of Facebook (FB – Free Report) users. This resulted in a sharp decline in the stock and the broader sector. This sparked concerns about data privacy and security and the prospect of more regulations. NVIDIA (NVDA – Free Report) announced the suspension of self-driving tests, raising concerns over new growth areas in the space and pushing shares down. Twitter (TWTR – Free Report) also dropped on expectations of further regulations on its platform. while Tesla (TSLA – Free Report) is losing on concerns over a recent Model X accident and lower-than-expected Model 3 production. Netflix (NFLX – Free Report) is probably being crushed for its super-high valuation.
Adding to the woes was the decline in Amazon (AMZN – Free Report) shares late last week, which shed about $30 billion from its market value on a single day. News that President Donald Trump is looking to target the e-commerce giant over antitrust or competition laws and is considering ways to change the tax treatment took its toll on the stock. The stock yet again took a hit to start the week as Trump continued his series of Twitter attacks on the online retailer.
The sell-off deepened with resurgent fears of a trade war between United States and China. This is especially true as China has retaliated against Donald Trump’s taxes on imported steel and aluminum with its own tariff of up to 25% on a series of 128 products worth $3 billion from the United States, including pork and wine, effective Apr 2. The Trump administration, looking to punish Beijing over technology transfer policies, is also expected to reveal the list of Chinese imports targeted for U.S. tariffs by this week.