Sharp Decline in US New York Stock Market Hits Software and E-commerce Hard... "Low Investment Preference"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The U.S. New York stock market plunged on the 5th (local time) as it belatedly reflected the results of the Federal Open Market Committee (FOMC) meeting, with software (SW) and e-commerce-related stocks taking a concentrated hit.

According to Bloomberg News and CNBC, the Dow Jones Industrial Average, S&P 500, and Nasdaq indices fell 3.12%, 3.56%, and 4.99%, respectively, compared to the previous trading day. The decline rates of the Dow and Nasdaq were the largest since 2020, and the daily drop of the S&P 500 was the second largest this year.

Bloomberg reported that software-related stocks stood out in the market that day. As investors avoided technology stocks vulnerable to high interest rates and slowing growth, software-related stocks experienced their worst decline since March 2020, the early days of the COVID-19 outbreak.

Software developer CrowdStrike and security specialist Zscaler both fell more than 10% intraday before closing down 9.69% and 8.86%, respectively, compared to the previous day. BlackRock's software sector ETF also dropped 5.75%, hitting its lowest level since September 2020. DigitalOcean Holdings and Rapid7 plunged 18% and 17%, respectively, after releasing earnings and outlooks that fell short of market expectations.

Bloomberg also conveyed market experts' analysis that most software companies' stocks are overvalued and profitability is declining, making it difficult to gauge the bottom.

Besides software stocks, e-commerce-related stocks, which had been beneficiaries throughout the COVID-19 period, showed a downward trend due to concerns over reduced online consumption and decreased consumer spending power amid inflation. According to CNBC, online furniture retailer Wayfair's stock plummeted 26%, hitting a 52-week low, and online marketplace Etsy fell 17% in a single day. The stock declines were driven by disappointing earnings.

E-commerce companies Shopify and Amazon also saw their stock prices drop 15% and 8%, respectively, following their first-quarter earnings announcements.

Wells Fargo analyst Zachary Fadem evaluated, "Although growth is significant, there is no cash flow, and investor preference for stocks that benefited from COVID-19 is very low."

This content was produced with the assistance of AI translation services.