(Bloomberg) — A near-record number of tech stocks have plunged by some 50% in an echo of the dot-com crash.
Roughly four in every 10 companies on the Nasdaq Composite Index have seen their market values cut in half from their 52-week highs, while the majority of gauge members are mired in bear markets, according to Jason Goepfert, chief research officer at Sundial Capital Research.
“Whatever the fundamental and macro considerations, there is no doubt that investors have been selling first and trying to figure out the rest later,” Goepfert said in a note.
Another way of thinking about the tech wreck: At no other point since the bursting of the dot-com bubble have so many companies fallen like this while the index itself was so close to a peak.
“Valuations are at historical highs, companies are raising billions based on fairy dust, and the Fed is signaling a tightening cycle,” Goepfert said. “All of these are scaring investors that we’re on the cusp of a repeat of 1999-2000.”
Tech stocks have been under pressure since the start of the year amid a bond-market selloff that’s driven yields on 10-year Treasuries to 1.72%. The carnage worsened after minutes of the Federal Reserve’s last policy meeting — released on Wednesday — pointed to earlier and faster rate hikes, suggesting to some that the central bank became more hawkish quicker than many had expected. Traders were quick to unload tech shares, whose high valuations become harder to justify in a rising-rate environment.
All this could spell trouble for active managers with broad market exposures since so many stocks are off their recent highs.
Read more: Goldman Calls Out Active Fund Managers Over Missed Opportunities
The Nasdaq Composite index is on pace for its biggest weekly decline since November, even as it rose in the New York afternoon trading session Thursday. A 3.3% fall Wednesday marked its worst single-day session since February last year.
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