The tech-heavy Nasdaq fell 2.7% on Monday, while the S&P dropped 2.2% and the Dow Jones lost 1.9%.
Interactive Investor head of investment Rebecca O’Keefe said each of the major tech companies has its “own particular set of problems to deal with”.
Amazon, which lost 5% on Monday, has been under fire from Donald Trump (see tweet below), Facebook is suffering a fallout from data security lapses, Tesla has missed targets compounding fears of excessive leverage and Intel has been hit by news Apple is looking to use its own chips in Mac computers.
I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!
— Donald J. Trump (@realDonaldTrump) March 29, 2018
O’Keefe said: “The one thing these companies do have in common is that these stocks are held by most of the big popular global funds. This means that many investors may have substantial exposure, even if they are not direct shareholders, which makes the tech troubles a wider problem.”
Technology & Telecommunications was the second worst performing Investment Association sector in March, according to FE figures, losing 5.3%, while the T Rowe Price Global Technology Equity fund and L&G Global Technology Index Trust were among the worst performing funds, falling 8.1% and 7.9% respectively.
Architas investment director Adrian Lowcock said: “Increased regulation looks likely, with the potential for some companies to be broken-up, which will impact on company growth prospects and profits. After such a strong performance of the tech giants and some pretty heady valuations a dose of reality has hit the share prices hard and could continue to weigh on the sector for some time.”
Lowcock notes the month’s worst-performing funds, T Rowe Price’s US Large Cap Growth Equity and US Blue Chip funds, both have a bias towards technology with just under 40% exposed to the sector.
The funds fell 8.5% and 8.3% respectively.
Lowcock added: “The volatile performance of tech focused funds in March is a reminder to investors that high valuations can result in increased volatility and it is important to be diversified across different sectors and management styles.”