After a sharp correction earlier on Tuesday, shares of Big Tech made a good recovery by the end of the trading session. The fears of inflation continue to hover over the market.
On Tuesday, May 11, it was quite a volatile session for the US stock market with Nasdaq (INDEXNASDAQ: .IXIC) and Dow Jones (INDEXDJX: .DJI) staying under pressure. Earlier in the day, tech-heavy Nasdaq was under pressure amid rising concerns of inflation & high valuations. the selling, however, was visible market-wide.
US Stock Market on May 11
However, by the afternoon session, shares of the Big Tech companies started bouncing back. The pullback in stocks like Amazon.com Inc (NASDAQ: AMZN) and Netflix Inc (NASDAQ: NFLX) helped Nasdaq recover its early day losses. AMZN stock ended the session 1% up while NFLX stock ended 1.72% up.
The Nasdaq ended the day 0.01% down at 13,389.43 levels. On the other hand, Dow Jones registered a drop of 1.36% or 437 points ending the day at 34,269.16. Home Depot and Travelers Company dragged Dow Jones lower on Tuesday. The S&P 500 (INDEXSP: .INX) also continues its slid closing 0.9% lower at 4,152.10. The S&P 500 has ended 10 out of the last 11 trading sessions in red.
Earlier during Tuesday, highly valued tech stocks fell sharply spreading the negative sentiment across the market. Apart from Amazon and Netflix, Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) and Apple Inc (NASDAQ: AAPL) reduced their early day losses. The CBOE Volatility Index (VIX), a measure of fear in the market touched a two-month high of 23.73. The rising VIX is often an indicator for a strong market correction.
However, it is clear that investors have continued to buy the dip in tech stocks amid the sharp sell-off. The fears of inflation and higher interest rates have kept the markets on the edge. Rising interest rates are a buzz off for growth-oriented companies as they eat into the future earnings of the company.
Stanley Druckenmiller slams the Fed and the US Government
The US government along with the Fed has been releasing massive amounts of stimulus in the already hot economy. This has further fueled concerns of inflation while endangering the US Dollar’s reserve status. Hedge fund titan Stanley Druckenmiller expressed his concern on this matter saying:
“I can’t find any period in history where monetary and fiscal policy were this out of step with the economic circumstances, not one. If they want to do all this and risk our reserve currency status, risk an asset bubble blowing up, so be it. But I think we ought to at least have a conversation about it.”
Inflation worries kicked in starting March followed by a shortage in labor and a surge in the Consumer Price Index (CPI).
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.