Big Tech Stands Strong Alone Despite Aftermath of SVB Crisis

The possibility of a tightening shift brought to light by the Silicon Valley Bank (SVB) crisis in the United States led to increased expectations for growth stocks, resulting in a clear rally in large technology stocks.

On the 13th (local time) in the U.S. Nasdaq market, Microsoft (MS) surged over 2%, while big tech market leaders Apple (1.33%), Amazon (1.87%), Alphabet (0.71%), and Meta (0.77%) all closed higher.

With the strength of large technology stocks, the Nasdaq index in the New York stock market closed at 11,188.84, up 49.96 points (0.45%) from the previous session. The Dow Jones Industrial Average and the S&P 500 index closed down 0.28% and 0.15%, respectively, compared to the previous session.

The solo strength of technology stocks was due to the lowered likelihood of Federal Reserve Chairman Jerome Powell's warning of a 'March big step (0.5 percentage point increase in the benchmark interest rate)'?which had been weighing down large tech stocks?becoming a reality following the SVB impact.

Financial information provider Refinitiv sees the possibility of the Fed holding interest rates steady at this month's Federal Open Market Committee (FOMC) meeting at over 50%.

[Image source=Yonhap News]

Big tech stocks, which move based on expectations of future earnings, are heavily influenced by interest rate policies. Rising interest rates discount future earnings and increase companies' borrowing burdens, which has been a burden on tech stock prices so far.

U.S. economic media Barron's predicted that the stock price trend of technology stocks will be positive for the time being as investment sentiment toward growth stocks recovers amid the low likelihood of the SVB crisis spreading into a broader financial sector crisis. Barron's cited Ita? BBA Securities, which named Apple and MS as the top picks following the SVB crisis.

As the policy focus is likely to shift from inflation concerns to financial stability due to the SVB crisis, U.S. Treasury prices surged. On the day, the 10-year Treasury yield fell more than 20 basis points intraday, dropping to 3.43%. The 2-year Treasury yield fell more than 60 basis points, hitting a low of 3.91%. This marked the lowest level since September of last year.

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