Why Tech Stocks Could Continue to Decline Next Quarter

NASDAQ corrects

Stock markets have continued to take a beating amid more signs of a global slowdown and the Fed hiking the funds rate to 2.5% during its December meeting. Softening economic data has caused oil prices to fall ~41% in the last couple of months.

The US-China trade war could not only stifle the countries’ economies—the world’s largest—but also cause a ripple effect that could slow other economies. The tech-rich NASDAQ Composite has fallen by 17.3% since October 3, 3.8% this year, and 11% this month alone. It now stands at 6,636.83.

Why Tech Stocks Could Continue to Decline Next Quarter

Tech companies’ top-line growth decelerates

Momentum stocks are usually the hardest hit when markets decline. Netflix (NFLX), Amazon (AMZN), Square (SQ), and AMD (AMD), which saw great returns up until October, have been notably impacted.

Whereas investor greed and excitement had caused tech stocks to rally over the last couple of years, revenue growth for all FANG (Facebook, Amazon, Netflix, and Google) stocks decelerated in the September quarter. Investor sentiment is a key short-term stock driver. With 2019’s outlook not looking good, stocks could continue to struggle in the year’s first quarter.