On the first day of 2022 trading, Tesla (TSLA) roared back to set the positive tone. That ended the next day when FAANGM stocks fell in the last week. Why did Netflix (NFLX) and Google (GOOG) fare the worst?
On the charts, both Netflix and Google signaled a “double top.” That is a bearish signal that accompanied the Federal Reserve’s meeting minutes. Markets already expected three rate hikes last year. They did not expect the bank would have a highly aggressive tone on the pace of tapering.
Inflation is running too hot. Prices for goods are rising not only because of high energy costs, a shortage, and a disruption to the supply chain. Workers are getting exhausted in the service industry. Furthermore, companies that mandate Covid vaccination risk alienating the beliefs and wishes of the staff. Thanks to low unemployment and more job openings, workers may quit and work elsewhere.
FAANGM stocks, which accounted for much of the stock market’s gains in the last year, are losing momentum. Investors do not want to overpay for those stocks when rates are about to rise. Risk-free treasuries have a higher yield, which will compete for investor money. Facebook and Amazon will have lower stock prices on the way. When investors decide they are safe again, they will buy them.
