Tech stocks plunged in 2018
2018, especially the second half, was a rough year for stocks. In fact, it was the worst year for stocks in a decade. Tech stocks—which had seen a stellar rally this decade—corrected toward the end of 2018.
The tech-rich NASDAQ Composite was down 6.2% while the broader S&P 500 index was down 7.0%. Tech stocks had held strong for most of the year but collapsed during the fourth quarter.
December, in particular, was a brutal month. The NASDAQ Composite slipped 10.8%, compared to the S&P 500’s 9.2% decline.
Stocks face some headwinds going into 2019
Volatility soared high in 2018 as a result of softening economic data, fear of a global slowdown, political dysfunction, and the possibility of higher regulation in the technology sector.
Apart from Amazon (AMZN) and Netflix (NFLX), which also plunged at the back end of the year, FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google) saw negative returns. Most FAANG stocks saw a deceleration in revenue growth on a year-over-year basis in the third quarter of the calendar year.
2019 could be a year of consolidation for stock markets. While many stocks have been beaten down and are now trading at attractive levels, a global slowdown could stifle stocks, especially if the trade war between the two biggest economies escalates.