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Tech stocks are quietly experiencing their worst one-month start in 2023, giving up some of their torrid year-to-date gains as investors lock in profits and Treasury yields rise.
The Nasdaq composite index, which tracks the sector, fell 3% in August during its first six trading days of a month, the worst since December 2022, jeopardizing a five-month streak.
The index is still up 32% so far this year despite those losses, driven by a big surge in interest in synthetic intelligence and an immediate slowdown in inflation, bolstering traders’ confidence that the Federal Reserve is nearing the end of its term in an emerging interest rate cycle.
But that trend stopped in August, when Wall Street compared two decisions by high-profile rating firms and bonds appeared to be a viable option against stocks.
Fitch downgraded the U. S. credit rating last week, damn markets and sending the Nasdaq down 2% in two days.
The Big Three, Moody’s, added to the list of investor considerations on Tuesday as the downgrade of 10 U. S. lenders triggered a sell-off in bank shares and sent the index down 0. 8 percent.
Meanwhile, yields on 2- and 10-year U. S. Treasuries have risen as the U. S. government issues more bonds to accumulate debt, offering investors higher yields a potential option against lower-risk stocks.
August is the second-worst month for the Nasdaq in 52 years, according to Dow Jones data: The tech benchmark tends to perform worse than in September.
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