Tech stocks have been hit hard since the start of the year after impressive gains over the last two years. Investor concerns surrounding Fed’s tighter monetary policy to combat 40-year high inflation caused the tech-heavy Nasdaq Composite Index to register its worst performance in January since March 2020. Also, the escalating war between Russia and Ukraine has aggravated already volatile market conditions.
Consequently, U.S. equity indexes have stumbled dramatically. The tech-centric Nasdaq Composite Index declined 18.2% year-to-date and 18.4% over the past three months. Some tech stocks were down 75% this year from their highs in 2021. And as investors rotate toward energy and defensive stocks given the current macroeconomic backdrop, overvalued cloud stocks are expected to lose momentum in the near term.
