Tech stocks face another 10% drop or more as rampant U.S. inflation eats into profits

According to Bloomberg’s MLIV Pulse survey of professional and retail investors, the great stock selloff of 2022 is far from over as investors in tech stocks brace for earnings misses due to U.S. inflation running at forty-year highs that may spur a more than 10% plunge in the Nasdaq 100.


Nate Lanxon and Heather Burk for Bloomberg News:

More than two-thirds of 914 respondents in the MLIV Pulse survey think profits of the technology companies will disappoint the market throughout 2022. Firms including Alphabet Inc.’s Google are at risk of advertisers cutting spending as the global economy struggles, while streaming services including Netflix Inc. face an exodus of price-sensitive subscribers with consumers tightening their belts.

The Nasdaq 100 is down about 31% so far this year, wiping trillions of dollars in market value… Inflation is driving up costs, while a stronger dollar is weighing on profits and the threat of recession is growing.

Apple Inc. said it will raise the price of its App Store purchases across Asia and countries that use the euro, as the value of foreign currencies collapses relative to the dollar. Microsoft Corp. lowered its forecast because of the currency’s strength in June…

About a third said they planned to increase their exposure to tech stocks, just under a third said they’d reduce it, and the rest said they’d hold steady over the next six months. Tech remains attractive on some metrics, such as the current price-to-earnings ratio compared to its 10-year average, while companies like Apple are still big cash generators. More generally, it’s hard to avoid tech — the S&P 500’s biggest sector by far at almost 27%.

MacDailyNews Take: For those who are looking for nice deals and safe harbors in tech stocks, the fact remains:

Apple iPhone customers are the most recession-proof smartphone buyers.MacDailyNews, September 7, 2022

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  1. Is it really inflation?
    When a newly elected president, that publicly said during the run-up to elections, that he will kill off the oil and gas industries, on his first day in office signed a flurry of executive orders that hampered oil and gas industries. Oil & gas immediately went up in price.
    So anything that uses energy to design it, build it, store it and ship it, will obviously go up in price. Get oil and gas prices back down and you should see product prices drop.

    It’s not inflation if people are causing it on purpose.

  2. Personally, as a white cisgendered non-female non-LGBTQIABCXYAZ+++++, I love paying more for EVERYTHING. I love it when my portfolio is DOWn. I just think of it as my way of paying reparations to all the people who I have never even met that feel wronged by me having been born 50+ years ago. Brandon Kamala ’24!

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