Technology companies were some of the biggest winners during the pandemic, as lockdowns led people to conduct more of their business — and life — online. This added trillions of dollars to these companies’ market values, giving them an outsize influence on broad-based stock market indexes like the S&P 500.
When economies began to reopen, high-flying stocks like Netflix, Peloton and Zoom fell back to earth. The growing worries about inflation, geopolitics and the possibility of a recession have also hit tech giants like Apple and Amazon in recent months, with investors reassessing their heady valuations. The tech-heavy Nasdaq composite index is down nearly 30 percent from its mid-November high.
As the S&P 500 index has drifted toward a bear market, defined as a 20 percent fall from a recent peak, tech stocks have paced the decline. The technology sector accounts for nearly 30 percent of the value of the S&P 500, and just five of the industry’s largest companies — Alphabet, Amazon, Apple, Meta and Microsoft — comprise about 20 percent of the index.
Since the start of the year, when the S&P 500 hit its peak, the fall of these tech giants explains much of the overall decline in the stock market:
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Alphabet is down 22.8 percent this year, through Wednesday’s close, a decline worth about $440 billion in market value.
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