Actions of Metaplatforms (GOAL -4.84%), Amazon (AMZN -4.49%)Y Apple (AAPL -3.69%) all tanked this morning following the Fed’s decision to raise the fed funds rate by 75 basis points yesterday.
heavy technology Nasdaq Composite fell 3.7% this morning, and the tech giants followed suit, with Meta losing 4.8%, Amazon 4.2% and Apple falling 3.5%.
The Fed is highly focused on curbing inflation, which is at its highest point in 40 years, but investors from all walks of life worry that aggressive rate hikes will slow the economy too much and even cause a recession.
Those fears were magnified after the Fed’s significant interest rate hike yesterday, which was its biggest rate hike since 1994.
After an initial positive response to the rate hike yesterday afternoon, investors are now increasingly concerned that the Federal Reserve will have to keep raising interest rates throughout this year to control the inflation.
Investors in Meta, Amazon and Apple may be latching on to comments made by Fed Chairman Jerome Powell, who said yesterday that “from today’s perspective, a 50 basis point or 75 basis point hike looks more likely in our next meeting.” Though Powell said he doesn’t expect 75 basis point hikes to be common.
While stocks across sectors have fallen of late, tech stocks have taken it especially seriously as some investors flee high-growth investments and seek safer places to put their money.
Meta, Amazon and Apple investors, in particular, are likely concerned that a potentially slowing economy could hurt Meta’s advertising business, while Amazon and Apple shareholders may be focusing on supply chain issues, rising material and shipping costs; and the potential for consumer demand. for products to slow down in the coming months.
While Meta, Amazon, and Apple shareholders are right to closely follow the Fed’s moves and consider how rake increases could affect the economy, they should also try to keep a long-term perspective on their investments.
All of these companies have plenty of cash on hand to weather an economic storm, and have already shown that they can weather uncertain circumstances and adjust some of their business strategies, as they had to during the height of the pandemic.
That’s not to say that Meta, Amazon, and Apple stocks won’t have more turbulent times ahead, but it’s worth remembering that keeping a five-year (or longer) timeline on your investments is the best way to avoid overreacting. exaggerated. while others panic.