Inflation is trending down in line with expectations, which is neither good news nor bad news for tech stocks. Core inflation increased to 5.7%, and while it would appear that the Fed may downshift rate hikes, the outlook hasn't changed meaningfully from what it was one week ago. After the 33% decline in the Nasdaq 100, its worst showing since 2008, "Analysts have already slashed revenue growth estimates for tech companies to 2.4% for 2023, versus a consensus projection of 5.4% just three months ago," according to Bloomberg Intelligence.Īnd although projections for 2023 earnings are expected to fall 2.2% versus the growth projection of 4.3%, as investors and the economy battle 40-year high inflation, consumers - and companies - will likely feel the pain.īut then there's the latest 'Goldilocks' CPI reading that shows consumer prices rose 6.5% over the last 12 months, one of the slowest inflation rates in a year. Uncertainty is looming in the first part of 2023 as an economic downturn seems likely, and companies take steps to reduce costs in anticipation of revenue declines. Six Quarters of Tech Declines (Bloomberg Finance) Six Consecutive Quarters of Tech Declines And after poorer than expected earnings, slowing revenues, deteriorating profit margins, and slashing more than 154,000 jobs in 2022, many tech companies continue their plight.
Technology was one of the worst-performing sectors ( XLK) -24%, ending 2022 with six consecutive quarters of declines, as showcased in the below chart. It's not new news that the 2022 markets took investors and their portfolios on a rollercoaster ride.
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