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Apple was worth more than $ 1 trillion at the beginning of November. Now it is valued at $ 880 billion.
The powerful titans of technology and their seemingly endless profits, which have fueled one of the longest bull markets on the stock market, seem a little less invincible. Shares of Alphabet, the parent company of Apple and Google, have fallen more than 10% since the peak of the market, while Facebook and Amazon have fallen more than 20%.
Investor confidence has been eroded by slowing growth and a trade war with China, as well as a steady stream of revelations about privacy breaches, security issues and mismanagement. If technology stocks can not shake their fears, the rest of the market could suffer.
The vast majority of technology companies give them a disproportionate influence on the market, in both directions. The tumult of technology on Monday pushed the major stock indices into negative territory for November, leaving investors hanging on to a gain of less than 1% for the year.
"You're seeing extreme sales in the only prime area where everyone has run," said Tony Dwyer, chief market strategist at Canaccord Genuity brokerage firm in New York.
The sale has spread to Asia on Tuesday. Traders from Shanghai and Shenzhen, China, led the sale, but other Asian financial capitals like Tokyo; Seoul, South Korea; Taipei, Taiwan; and Hong Kong were also down in morning trading. Futures contracts that predict Wall Street's performance are also trading.
The stock market would seem disconnected from the rest of the US economy. The unemployment rate remains low and growth is expected to post its best annual performance since 2005. Third-quarter profits for S & P 500 companies are expected to increase by 28%, according to Refinitiv.
But investors worry more and more about business prospects. Europe and China are facing economic weakness, while higher interest rates and rising labor costs could reduce margins.
"There is definitely a global slowdown," said James Bianco, president of the market research firm, Bianco Research, in Chicago. "The United States has definitely been stronger than the rest of the world. But the fear is that it can not hold. If the rest of the world slows down, it will slow us down too. "
The shares of industrial companies, considered particularly vulnerable to rising trade tensions with China, have fallen by more than 10% since September. Economically sensitive financial stocks slipped 7.5 percent. Shares of homebuilders, who are vulnerable to rising rates, have fallen by more than 30%.
The possibility of increasing borrowing costs also weighs on small businesses that often borrow money by issuing variable rate debt, which may become more difficult to repay when interest rates rise. The Russell 2000 Small Cap Equity Index is down 14% from its peak.
"It's just a continuation of the recent reassessment of risk, or fear of growth, we've been seeing since the end of September," said Talley Leger, equity strategist at Oppenheimer Funds.
When the stock market reached its peak in September, technology led the way, accounting for 50% of the year's earnings. In the beginning, technology giants seemed immune to the sale that ensued as a result of broader economic concerns.
Not anymore. On Friday, about a quarter of the decline in the market since September was due to Amazon, Apple, Facebook and Alphabet, according to data collected by S & P Capital IQ. The strong Monday sale will only add to this total.
Investors seem particularly focused on any sign that the extraordinary profits generated by these tech giants are under threat.
The specter of regulation hangs over Facebook's actions as it addresses the spillovers and costs of data breach, privacy breaches and management errors. The pressure was amplified only by the renewal scrutiny of his response to Russia's efforts to use it to influence the 2016 presidential election. The stock fell further by 5.7% on Monday.
Similarly, Alphabet faces regulatory repression of business practices in Europe and the concerns of elected representatives in the United States about political prejudices. His shares fell nearly 4% on Monday.
Regulation worries tech investors. Apple CEO Tim Cook warned that new industry rules are "inevitable," he told Axibone in an interview that was broadcast Sunday.
"I am a strong supporter of the free market. But we have to admit that when the free market is not to work, "he said," I think Congress and the administration are going to adopt something at some point. "
The question of whether technology stocks can ease concerns will depend in part on the ability of companies to continue to generate strong earnings growth, even if the global economy slows significantly. Recent earnings reports from major technology companies have done little to reassure investors.
Low demand for the new phones Apple has harmed its actions and those of its suppliers. The month began with Apple's release of lower than expected sales forecasts. Last week, a supplier warned investors that one of its biggest customers had reduced its orders.
Since Apple's stock price hit just over $ 232 on October 3, the stock has fallen nearly 20%, exceeding the company's market value by $ 200 billion. His shares were down nearly 4% on Monday.
Amazon announced a slowdown in retail sales growth at the end of October, driving down stocks. For investors, who often see income figures as a good indicator of the strength of demand in the economy, it was more important than the $ 2.9 billion in earnings reported by the company.
But if they actually produce the numbers expected by Wall Street analysts, the recent decline in large technology stocks could offer an opportunity for some investors to buy. The main valuation measures of Apple and Alphabet have reached several highs this summer. But the recent decline has left these ratings considerably lower. The prices of Facebook and Amazon are relatively low compared to the expected profits, which means that these shares seem "cheap" for some investors.
But they may need even less before investors are tempted to buy them. This is why some people expect the market sentiment to worsen long before equities resume their rise.
"I'm kind of looking for some more pessimism," said King Lip, chief strategist at wealth management firm Baker Avenue.
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