Nasdaq plunged into correction territory on Monday after the US government started targeting the big four tech stocks – Amazon, Apple, Facebook and Google (Alphabet).
At the same time, the yield on the key 10-year US Treasury bond fell to just over 2%, the lowest for 21 months and down nearly 6 points on the day.
A senior fed member said on Monday that rate cuts could become an option, and Fed chair, Jerome Powell is due to make comments and take questions at a Fed function in Chicago and many US analysts would not be surprised to see a more dovish tone emerge with his appearance.
The impact of Donald Trump’s trade wars continue to stir investor fears but added to that volatile mix now is at least two probes of the big mega-techs like Apple, Facebook, Google, and Amazon.
Left out of the stories was Microsoft, currently the most valuable company in the US, but its shares fell 3.1% on Monday as it was caught up in the sell-off.
The Nasdaq stood out on its own, dropping 120.13 points, or 1.6%, to 7,333.02 to finish in correction territory – that’s defined as an index closing at least 10% below its recent peak, which for the Nasdaq was a record finish of 8,164 hit on May 3.
Much smaller moves were seen elsewhere – the S&P 500 index slid 7.61 points, or 0.3%, to 2,744.45 while the Dow bounced back to erase a more than 100-point deficit to close up 4.74 points to 24,819.78.
Shares of Alphabet sank 6.1% following reports the US Department of Justice was looking at the activities of mega-techs and whether they might be in breach of anti-trust rules.
Apple shares fell 1% despite a developers conference where the move deeper into services was confirmed by the tech giant (and the downgrading of iPhone hardware sales). Shares of Amazon.com Inc. dropped 4.6% and Facebook shares skidded 7.5%.
Those four companies are among the five most valuable tech companies in the US, with a combined market value of nearly $US3 trillion.
Only Microsoft – itself the focus of one of the biggest antitrust investigations against tech in US history, during the days of the dot-com boom and bust — has so far avoided reported scrutiny from the group of tech’s biggest heavyweights.
That left the top valued shares on Wall Street at Monday’s close as Microsoft with nearly $US948 billion, Amazon second with $US873 billion, Apple third with $US803 billion, Alphabet (Google) 4th with $US766 billion and Facebook with $US506 billion.
Complicating matters is that all five giants are also being buffeted by the growing fears about the impact of Donald Trump’s trade wars on China, India, Mexico, Europe, and Japan.
The Wall Street Journal had reported that the Justice Department is preparing to investigate Google parent Alphabet Inc. for potential anti trust violations and Reuters later reported that the same department now had sole control of a probe into the activities of Apple.
