BEIJING, March 20 (UPI) — U.S. stocks hit a record closing high on February 19, led by four tech giants, all of which easily exceeded $1 trillion in market capitalisation, according tomedia reports. A month later, however, the sky turned upside down. The four tech giants (Apple, Microsoft, Amazon and Alphabet) and Facebook have lost a total of $1.3 trillion since the market peaked.
The spread of the new coronavirus has thrown the global economy into disarray, with the S. and P. 500 index, which rose 0.5 percent on Thursday, plunging 29 percent in the past month.
The Seattle area, where Microsoft and Amazon are headquartered, and the San Francisco-Silicon Valley corridor, where Apple, Alphabet and Facebook are headquartered, have been the two worst-hit areas in the United States since the outbreak began. Since Tuesday, residents of San Francisco and surrounding counties have been asked to take refuge, and schools and businesses across Seattle have been closed.
Investors are selling stocks, and some analysts say the recession has arrived.
Bill Ackman, a hedge fund manager at Pershing Capital, predicted “hell is coming” on Wednesday and urged President Trump to shut down the US for 30 days. Technology stocks led an 11-year bull market, emerged from the financial crisis, and now many technology stocks are deep in a bear market.
Apple said in mid-February that supply problems with the iPhone and falling Chinese demand would affect the company’s quarterly results. At the end of February, Microsoft said it would miss its quarterly results because it was “recovering less quickly than expected.”
But as some of America’s biggest companies are forced to close and unemployment is expected to soar, the crisis caused by the new coronavirus is hitting consumers’ wallets directly. Apple said it would close all stores outside Greater China until March 27. Michael Walkley, an analyst at Canaccord Genuity, cut Apple’s target price to $300 from $345 on Thursday.
“Following last month’s downgrade of our expectations due to the COVID-19 pandemic, we expect our near-term results to remain weak in view of its long-term impact on global smartphone supply and demand,” Walkley wrote. “
The effects of the new coronavirus are widespread. Amazon has reported a confirmed discovery of a new coronavirus in its warehouse, which led to the temporary closure of its New York plant. The company has also suspended its main food delivery service in the face of a surge in orders from a new outbreak of the coronavirus.
At the same time, Google and Facebook both rely on online advertising, and marketing departments tend to cut budgets when the economy slows.
However, despite the difficulties faced by the tech giants in the market, they are widely seen as a long-term robust business that will rebound in the wake of the new coronavirus pandemic. Michael Pachter of Wedbush Securities told its customers this week that it was putting Amazon and Facebook on its “best advice list” for its investment committee.
Pachet believes That Facebook has attracted more attention as more people get information about the new coronavirus over the Internet.
But despite this, Facebook has led the decline among top technology companies, plunging 30 per cent in the past month and losing an overwhelming position in the market.
Thursday’s rally helped technology stocks erase some of the losses over the past month, but the market has been unable to deliver days of gains. The Standard and Poor’s 500 index has not gained for several days since ending its three-day winning streak on February 12.