Let’s get to know “How The Stock Markets Have Fared So Far In 2022” Some leading tech stocks, listed in the S&P 500, had some of their worst performances in the first half of the year.
While big tech companies are not top of the list of poor-performing stocks, the size of the companies represents a lot of value even when a minuscule amount of profit disappears. Some reasons for the significant drop in the first half of 2022 in the market value of some gigantic tech stocks is because of inflation and the steps taken by central banks all over the world to stem it. As Central Bank presidents worked to stop inflation by raising the interest rates, taking new positions in the stock markets suddenly became unattractive for many investors.
Higher returns in government-backed bonds seem more lucrative during inflation for people looking to take new positions. In addition, following the systematic procedure to stake ether in PrimeXBT is also a viable option to diversify investments.
What Issues Have Dominated the Stock Markets in the First Half Of 2022
On top are the rising interest rates, which have been on an upward trend to stem inflation. While the move to curb inflation dampens consumer spending and cuts demand, it also sparks a rise in the cost of loans and the cost of paying back the loans for businesses. Higher rates dampen critical business activities like hiring, especially for smaller organizations.
A slowdown in executing new ideas and hiring new employers for businesses dampens investor confidence in the stock market. Slowdowns limit the growth of businesses and the stock market, making some stocks take a negative dive.
Inflation also increases the price of running a business. For example, in the UK, some smaller energy companies with existing contracts with the consumer, which locked the price to a specified limit, closed down because of the inability to maintain the prices when energy prices rose at unprecedented levels. Companies with a poor short-term growth outlook also push away investors.
The period of inflation has also invited a lot of uncertainty in many markets. Such situations dampen investor mood when moving into new areas and limiting them to tested commodities that withstand poor economic runs or a rise in interest rates set by central banks.
How Different Assets Have Fared In 2022
Tech companies have had a poor run this year—a significant shift from their impressive run at the height of the Covid pandemic. Apple, for example, has witnessed a price change of negative 23 percent in the first half of 2022. Previously, in 2021, the company registered an impressive increase of about 33 percent.
Apple’s performance is synonymous with most of the big tech stocks. Alphabet, another big player in the tech space, registered a 24 percent drop in the value of its stock. In 2021, it had an impressive 60 percent gain that made it stamp its authority in the tech space.
The biggest loser in the first half of 2021 in the tech space was Netflix, which shed over 70 percent. The company’s woes stem from the increased competition in the video streaming market. The company’s move to increase subscription prices in the North American market has also not gone well with long-term Netflix users, forcing some to either cancel or seek cheaper alternatives.
Compared to 2021, Netflix has so far performed dismally; it had an 11 percent rise in the value of stocks last year.
Best Performing Stocks In 2022
A majority of stocks, including cryptocurrencies, have had a tumultuous year. Crypto lost billions of dollars worth of assets, and for the first time in many months, the total valuation of the crypto market went below the trillion-dollar mark.
However, energy stocks have had a good run this year as the oil demand peaked after many countries came out of lockdowns. From the S&P 500, oil stocks rose by an average of about 40 percent in the first half of 2022. The biggest gainer was Occidental petroleum, whose stock increased by an impressive 126 percent. Closing the top ten is Constellation energy, which had a 40 percent increase in stock valuation.
While energy stocks have largely outperformed tech and crypto stocks. Investors still have a lot of confidence in tech stocks, as they remain one of the largest ones held in the stock market.
Bottom Line
Tech stocks had a good year in 2021 when the likes of Tesla crossed the trillion-dollar valuation. However, in 2022, things took a dramatic turn, as countries had to deal with many economic issues after coming out of the Covid pandemic. When the economic situation is dismal, investments in many trading avenues also drop. However, when economies benefit from the rise in interest rates, poor-performing stocks will have a turnaround.
