Show an ad over header. AMP

Why the tech stock selloff matters

Rising U.S. bond yields again sent tech stocks tumbling on Monday, with the tech-heavy Nasdaq composite index falling into its third 10% correction in the last year.

Why it matters: With the real economy still depressed, especially the labor market, continued weakness in Big Tech and a deflating housing market could undercut the expected economic recovery.


  • Both stocks and housing have been underpinned by historically low interest rates and inflation expectations, which now are jumping at the fastest pace in years.

What it means: Tech stocks have been incredibly volatile over the past year, rising and falling more than the rest of the market, as even trillion-dollar companies like Apple routinely see 3% and 4% daily moves.

The big picture: The exaggerated stock price moves in tech are amplifying overall market volatility, but that volatility bears watching because of the growing role tech plays in the U.S. economy.

  • All five of the largest U.S. companies by market cap are in tech — Apple, Microsoft, Amazon, Alphabet and Facebook, in that order — and together they hold a market cap of more than $8.2 trillion.
  • The entire S&P 500 has a market cap of $33.9 trillion, according to S&P Global, meaning the Big Five account for just under a quarter of the benchmark U.S. stock index's value.

By the numbers: On Monday, those five companies suffered an average share decline of 3%, led by 4% pullbacks in Apple and Amazon.

  • Tech companies across the board have been stung by the selloff, with previous world-beating market champions including Tesla, Zoom, Nvidia, Square and AMD all down by 20% since Feb. 12, when the Nasdaq hit its last record high.
  • Tesla is actually down by 35% from its last record high on Jan. 26, the third time in about a year it has lost close to a third of its value.

Between the lines: Despite all the talk of investors rotating from big, tech-heavy growth stocks to "cheaper" value stocks over the past month, the biggest beneficiaries of the rotation have been stocks with incredibly high forward price-to-earnings ratios like ExxonMobil (278.2 12-month forward P/E), Disney (60.2) and Mastercard (45.8).

Big European soccer teams announce breakaway league

12 of world soccer's biggest and richest clubs announced Sunday they've formed a breakaway European "Super League" — with clubs Manchester United, Liverpool, Barcelona Real Madrid, Juventus and A.C. Milan among those to sign up.

Details: So far the breakaway league that's due to start in August consists of six clubs from England, three from Spain and three from Italy.

Keep reading... Show less

Senate Democrats settling on 25% corporate tax rate

The universe of Democratic senators concerned about raising the corporate tax rate to 28% is broader than Sen. Joe Manchin, and the rate will likely land at 25%, parties close to the discussion tell Axios.

Why it matters: While increasing the rate from 21% to 25% would raise about $600 billion over 15 years, it would leave President Biden well short of paying for his proposed $2.25 trillion, eight-year infrastructure package.

Keep reading... Show less

Republican leaders raked in sizable donations from grassroots supporters

Republican leaders turned to grassroots supporters and raked in sizable donations after corporations cut them off post-Jan. 6.

Why it matters: If those companies hoped to push the GOP toward the center, they may have done just the opposite by turning Republican lawmakers toward their most committed — and ideologically driven — supporters.

Keep reading... Show less

CDC: Half of US adults have received one COVID-19 vaccine dose

Data: CDC; Chart: Axios Visuals

Half of US adults have received at least one dose of the COVID-19 vaccine and about a third are fully vaccinated, according to new data from the Centers for Disease Control and Prevention.

Why it matters: COVID-19 cases and hospitalizations are still on the rise, CDC director Rochelle Walensky said during Friday's White House COVID-19 briefing. With cases in many states being driven by variants, public health officials have emphasized the need to ramp up vaccinations.

Keep reading... Show less

Israeli intel agencies believe Vienna talks will lead to U.S. return to Iran nuclear deal

Israeli military intelligence and senior officials in the Mossad briefed a meeting of the nation's security cabinet that talks in Vienna between Iran and other world powers will lead to the U.S. returning to the 2015 nuclear deal, two officials who attended the meeting told me.

Why it matters: The Israeli government is very concerned about a U.S. return to the nuclear deal and is trying to convince the Biden administration not to take the pressure off the Iranian regime.

Keep reading... Show less

"It hurts": Latino community of 13-year-old killed by police in Chicago reels after shooting

Residents of Little Village, a well-known and predominantly Latino neighborhood in Chicago, are grieving the death of Adam Toledo, a 13-year-old Mexican American boy from the neighborhood who was shot and killed by a police officer on March 29, NBC News reports.

Why it matters: Adam Toledo's killing shines a spotlight on police shootings of Latinos, who are killed by law enforcement at the second-highest rate after Black Americans, according to data from the Washington Post.

Keep reading... Show less

Biden adviser warns "there will be consequences" for Russia if Navalny dies

The Biden administration warned the Russian government "that there will be consequences" if jailed Russian opposition leader Alexei Navalny dies, National Security Adviser Jake Sullivan told CNN on Sunday.

The big picture: Sullivan also defended President Biden for not mentionining Navalny in a Thursday speech about Russia or in a Tuesday call with Russian President Vladimir Putin,saying the White House aims to deal with the issue "privately and through diplomatic channels."

Keep reading... Show less

Prosecutor on leave for failing to "fully present the facts" after shooting of 13-year-old boy

Cook County prosecutor James Murphy was placed on administrative leave Friday after he implied in court that 13-year-old Adam Toledo, who was shot and killed by a police officer in March, was armed when he was shot, the Chicago Tribune and Chicago Sun-Times report.

Why it matters: Videos of the shooting show that Toledo dropped what appears to be a weapon and put his hands in the air a moment before before he was fatally shot. A lawyer for the Toledo family said Thursday that if the teen "had a gun, he tossed it."

Keep reading... Show less

Insights

mail-copy

Get Goodhumans in your inbox

Most Read

More Stories