Tech stock stumble to worst start since 2016 on rate hike fears

• ByStartupStory     |    January 16, 2022

The stocks of U.S  technology companies are facing the worst start to a year since 2016 as fears about runaway inflation imperil the heady valuations.

Followed by multiple failed attempts this week to rally back dynamically, investors remain hesitant to plow heavily back into shares of growth stocks and there’s still no major signals that the pressure on technology companies will decline anytime soon.

The Nasdaq 100 Index, which includes some of nation’s technology behemoths, is down more than 4% this year, even after a bounce late Friday that erased its losses.

High- flying expansion stocks are being particularly hard hit by the growing conviction that the federal Reserve will soon start with drawing the heavy monetary stimulus that has kept the financial system afloat in cash since the pandemic hit.Worries about increased rates were fueled by data this week it shows that U.S consumer prices soared last year by the most since June 1982 while U.S retail sales fell in December by the most in 10 months, indicating that higher prices may be dissuading consumers.

That impends over to put further pressure  on tech stocks with valuations based on future profit growth, since higher interest rates reduce the present value of those expected earnings.

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