Tue. Jan 18th, 2022

For the week, Alphabet Inc shares fell 5.4 percent, while Microsoft Corp shares fell 6.6 percent.

By Bloomberg

Alphabet Inc. fell on Friday, with the Google parent prolonging a decline that led to its worst weekly performance since the start of the Covid-19 pandemic.

Shares fell 0.5% in their fourth consecutive negative session. For the week, it dropped 5.4%, its biggest weekly drop since March 2020. Microsoft Corp. ended Friday’s session with a gain of less than 0.1%, but dropped by 6.6% over the course of the week.

The weekly trail came amid a rise in U.S. bond yields, which has largely put pressure on high-growth stocks. Yields on the U.S. 10-year treasury climbed to about 1.77% on Friday, the highest since January 2020, after trading as low as 1.4% in December. Higher rates are seen as a headwind for high-growth and relatively expensive stocks as it reduces the present value of future earnings.

Trade on Friday was also affected by the latest employment report, which showed a drop in the unemployment rate and an increase in wages.

Graph of percentage change in share prices of Microsoft and Alphabet

Among other names, Apple Inc. Rose 0.1% on Friday, while Amazon.com Inc. Lost 0.4% and Meta Platforms Inc. decreased by 0.2%.

The iShares Expanded Tech Software Sector ETF fell 0.8%. For the week, it has fallen 8.8% in its biggest drop since March 2020. The magnitude of the recent weakness has seen some analysts value in the sector. Goldman Sachs wrote that “the group may be oversold,” given a positive view for demand trends in 2022.

For Microsoft and Alphabet, the rough start comes to 2022 after a year in which both companies fared sharply better. Alphabet has risen 65% over the course of 2021, more than doubling the yield of nearly 27% of the Nasdaq 100 index. Microsoft rose more than 50% last year, its 10th consecutive positive year, as well as its ninth consecutive year with a double-digit advance.

(Market closure updates.)

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