Nasdaq enters correction as tech stocks drop
Add Axios as your preferred source to
see more of our stories on Google.
Tech stocks are bearing the brunt of the current sell-off — and the tech-heavy Nasdaq composite index officially slipped into a correction after another decline on Wednesday.
Why it matters: A correction is a term of art Wall Street applies to a sell-off that pushes prices down 10% from a recent high. It’s a shorthand way of describing a market drop that’s more serious than your run-of-the-mill dip.
The big picture: The Nasdaq topped out in November, not long after the Fed began making noise about shifting its attention away from addressing the pandemic's job losses — and toward fighting inflation.
Be smart: Tech stocks are considered more sensitive to rising interest rates — something the inflation-focused Fed is widely expected to deliver.
- That stems from the fact that they tend to have high price-to-earnings ratios and typically pay little in the way of dividends.
The bottom line: As tech has become a bigger part of the overall stock market in recent years, rising rates have become a larger threat to broad market benchmarks like the S&P 500. Buckle up.
