Tech Companies Under Pressure on Wall Street Due to Interest Rate Fears

Technology companies were again under pressure on the New York stock exchanges on Monday. Concerns about high inflation and rising interest rates gripped the markets.

 

Higher interest rates are generally bad news for equities, especially for fast-growing tech companies’ often high valuations.

Due to low-interest record rates, there have been few alternatives to investing in equities in recent years. However, rising interest rates make it more attractive to invest in bonds, for example, which are considered safer than equities.

Shortly after opening, the Dow-Jones index was 1.3 percent lower at 32,461 points. The broad S&P 500 lost 1.5 percent to 4,060 points, and tech gauge Nasdaq also fell 1.5 percent to 11,962 points.

Investors also kept an eye on developments surrounding the war in Ukraine. Vladimir Putin defended the invasion of Ukraine in his speech during the celebration of the victory over Nazi Germany. According to the Russian president, the West was preparing for an invasion of Russia, including the Crimean peninsula.

Large tech companies such as Google parent Alphabet, Amazon, Apple and Meta Platforms, the group behind Facebook, lost up to 1.6 percent. Uber lost 0.2 percent. The taxi app wants to reduce its costs and advertising spending and is becoming more cautious about hiring new staff.

Rivian fell more than one percent after reports that the automaker Ford wants to sell part of its shares in the manufacturer of electric pickups and SUVs. This was previously impossible due to agreements after the IPO, but the so-called lock-up period has now ended.

BioNTech rose almost 5 percent. The biotechnology company posted significantly more revenue in the first quarter thanks to strong demand for the corona vaccine, which the German company has developed together with pharmaceutical company Pfizer.

Tesla fell more than 3 percent. The head of the Russian space agency Roscosmos has warned CEO Elon Musk of that company in Russian media about his aid to Ukraine. Musk offers free internet in the country through his company’s satellites, Starlink. “If I die under mysterious circumstances, it was nice to know you,” Musk said on Twitter.

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