Tech stocks were a growth engine for the market when the economy was tepid, but recently they've been sputtering and their troubles are helping drag the entire market lower.
Some of the biggest names in technology have been swooning.
Facebook is mired in a scandal over a breach of its user data, leading to calls for stricter government regulation of the social media giant. Since the beginning of February, its shares have dropped from $193 to $159 — a nearly 18 percent dive.
Amazon has been targeted in tweets by President Trump. On Thursday, he said the online retailer pays "little or no taxes" and is "putting many thousands of retailers out of business." Amazon's shares are still up a lot for the year, but they're down by more than 9 percent since March 12.
Apple, which faces questions about its growth strategy, is down about 8 percent since the same date.
The downturn has swept through the tech sector, dragging down companies that include IBM and Microsoft. The Nasdaq composite index, which includes many tech stocks, has lost nearly 7 percent over the same period. By comparison, the broader Standard and Poor's 500 index is down 5.5 percent.
"The market has a psychology right now of, 'When in doubt, get out. We'll figure out later what happened,' " says Julianne Niemann, a financial analyst at Smith Moore.
The slide is remarkable because tech stocks have long been seen as growth leaders, and investors have for the most part eagerly piled into them.
"If you think about social media, if you think about e-commerce, basically technology is the backbone for all of those different things, and for these corporations it's driven incredible profit growth," says Sameer Samana, global equity and technical strategist at Wells Fargo Investment Institute.
For investors searching for growth stocks in an economy that sometimes seemed anemic, stocks such as Facebook and Apple could look like lonely outposts of promise.
"Tech stocks have been the dominant area," Niemann says. "This is one thing that investors have jumped all over, simply because they can understand them. They love these stocks."
This tech downturn matters, because those stocks occupy an outsize place in the market — making up about 25 percent of the S&P 500, and they make up a big share of the stocks in retirement funds and mutual funds.
Niemann sees the recent turmoil as temporary, noting that conditions are considerably different than they were during the last big market downturn, in 2007-08.
"This is entirely different. We have not had a meaningful correction in a long period of time," she says. "There's so much cash available on the sidelines to invest that everybody keeps jumping in and chasing it back up again."
"The economy is still OK," she adds. "The market doesn't take down the economy."
Samana says the tech industry is still relatively young, and some hiccups are inevitable.
"We're still trying to figure out how things like social media fit into our lives and how data should be managed and all those different things. And so I think this is just part of the growing pains of, 'How do we regulate these companies?' "
But for now, investors are reassessing whether tech is as promising as it once appeared, and their new caution is being felt throughout the market.
AILSA CHANG, HOST:
All right, today was the last trading day of the month. U.S. markets are closed for Good Friday. Stock prices were up today after two days of losses, and the month as a whole was pretty bruising. For the first time in years, technology companies like Facebook, Google and Amazon are leading the way down. NPR's Jim Zarroli explains why.
JIM ZARROLI, BYLINE: Ever since the Great Recession, the U.S. economy has been growing at a pace that can usually be described as tepid. Sameer Samana of Wells Fargo Investment Institute says the one big area of promise has been technology companies.
SAMEER SAMANA: If you think about social media, if you think about e-commerce, basically technology is the backbone of all of those different things. And for those corporations it's driven incredible profit growth.
ZARROLI: And this has made tech stocks such as Apple, Amazon, Facebook and Google soar. Over the year ending on March 5, for example, Apple was up 29 percent. Juli Niemann, an analyst at Smith Moore and Company, says even when other stocks have underperformed, the love affair between Wall Street and tech stocks never waned.
JULI NIEMANN: Oh, tech stocks have been the dominant area. This is one thing that consumers - investors have jumped all over simply because they can understand them. They love these stocks.
ZARROLI: They love them, that is, until about two months ago. Niemann says there's no single reason for what's happened. Each company has had its distinct set of problems. Apple faces questions about its growth. How long will people keep buying bigger and better iPhones? Amazon is being attacked in tweets by President Trump. Tesla is facing production issues. And then there's Facebook.
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UNIDENTIFIED REPORTER: This morning, Facebook under fire, the pressure intensifying in the wake of that Cambridge Analytica privacy scandal affecting up to 50 million users.
ZARROLI: The uproar over Facebook's breach of user data is generating calls for strict government regulation of the social media giant. Since the beginning of February, Facebook's shares are down by 20 percent. Taken together, these problems have raised questions about the tech sector as a whole. Again, Juli Niemann.
NIEMANN: The market has a psychology right now of when in doubt, get out. We'll figure it out later what happened. And when you have a market that's that shaky, especially when the valuations are really high at this point, it's not happy Harry's house of bargains out there.
ZARROLI: The tech fallout isn't the only problem plaguing the stock market right now. The Trump administration has imposed tariffs on Chinese imports, which is sparking fears about a trade war. And the Fed and other central banks are raising interest rates, something stock investors never like. But the tech crowd is especially problematic because tech stocks make up a huge portion of the shares traded every day. About 25 percent of the companies in the Standard & Poor's 500 index are in tech. They make up a big proportion of the stock in most mutual funds and retirement accounts. Sameer Samana thinks the downturn is temporary. After all, he says, tech is still a relatively new industry.
SAMANA: We're still trying to figure out, you know, how things like social media fit into our lives and how data should be managed and all those different things. So I think this is just part of the growing pains of how do we regulate these companies?
ZARROLI: But for now, a lot of investors are reassessing whether tech stocks are the great bet they once thought they were. And until that changes, it's going to hurt the market as a whole. Jim Zarroli, NPR News, New York.
(SOUNDBITE OF AXEL KRYGIER'S "ECHALE SEMILLA") Transcript provided by NPR, Copyright NPR.