US tech stocks retreat further as fears grow
July 31, 2018
Wall Street stocks fell sharply on Monday, with fears rising over a potential decline in the value of the influential US tech sector.
The Nasdaq index, which is populated with tech companies, fell by 1.4 percent on Wednesday, its third successive drop of at least one percentage point. The Dow Jones fell by 0.6 percent while the broader-based S&P fell by the same margin.
Tech stocks have been in retreat since Facebook announced a weak outlook last week, saying that its expected growth would be much weaker than previously estimated due to privacy concerns and due to limits on its advertising revenue growth, which accounts for nearly all the social media giant's income.
Facebook's stocks have been falling steadily since the news, with shares in the company falling by 20 percent last week alone on the back of the results.
On Monday, Facebook shares fell by 2.2 percent, one of several behemoths of the US tech sector to experience sharp pullbacks.
Google parent company Alphabet fell by 1.5 percent, Microsoft lost 2.2 percent, Netflix went down by 5.7 percent and Apple shares lost 0.6 percent of their value.
Privacy grief
The tech sector, which has been a major driver of the value of the overall US stock market in recent years, is vulnerable to a fall in value as concerns over privacy and data have dogged major companies in the sector over the past year or so.
"We realize that these stocks are not going to justify their valuation, so there is a repricing of the Nasdaq to something more reasonable," Phil Davis, an analyst with PSW Investments, told the news agency AFP.
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The major tech giants have faced the increasing prospect of deeper regulation, particularly in Europe, where the European Commission has recently come down hard on Google and other major players over competition issues and other concerns.
Aside from its most recent stock issues, Facebook has also been embroiled this year in the Cambridge Analytica data scandal, an issue which stoked widely held concerns over how the world's biggest tech companies store user data and generally approach the issue of privacy.
aos/sri (AFP, Reuters)