It wasn’t long ago that Amazon and Apple share prices seemed to defy gravity, and were pulling the rest of the stock market up with them. But what goes up tends also to come down, and the biggest technology companies plunged as jittery investors cashed out today (Oct. 10), sending the tech sector to its worst day since 2011, according to the Wall Street Journal (paywall).
Tech stocks in the Standard & Poor’s 500 index tumbled 4.85%, and pulled the entire market down with them. The Dow Jones Industrial Average fell 831 points, which sounds scary, but since the Dow was soaring above 26,000, it was only a 3% drop and just the 80th biggest one-day fall in history, according to the Journal.
While it’s way too early to say the US economy is moving toward a long-overdue recession, tech stocks were in line for a correction after their gains this summer.
First Apple, then Amazon, reached $1 trillion market capitalizations in recent months, fueled by robust earnings and optimism about consumer buying power. But investors are beginning to doubt the shares will climb in perpetuity, as rising interest rates and nervousness about trade wars are signaling it’s time to move into more stable investments. Amazon dropped 6%, pulling its market cap down to a mere $856 billion (it also slashed $9 billion from CEO Jeff Bezos’s personal fortune, according to Bloomberg’s calculations). Apple fell 4.6%, leaving its market cap in 13 digits—barely. Twitter (down 8.5%), Netflix (8.4%), and TripAdvisor (7.5%) were also among the big tech losers.
A sell-off is also buying opportunity, and it won’t be a surprise if the market rallies tomorrow. But investors looking for reasons to bail out of the nine-year bull market may not wait for a second warning.