The Nasdaq posted its lowest week since the outbreak of the pandemic. It has lost billions to tech billionaires’ wealth, while Bitcoin is nearly half its peak.
Investors are trying to reduce risk before the Federal Reserve’s policy meeting next week. There is also concern about how aggressively they will raise interest rates.
For some, it was a warning sign for a market doomsday. British investor Jeremy Grantham (a legendary bear, who insists that corrections will be imminent) claimed this week that the US is currently in an asset superbubble’, which will soon burst spectacularly.
Shares in high-end tech companies have become less appealing as investors expect the Fed to raise interest rates at its March policy meetings.
Elon Musk, Telsa CEO, lost $25.1 billion (or more than 9%) on this week. The Nasdaq suffered its worst week in a decade with a drop of the tech sector.
The tech-heavy Nasdaq is down 14.3 percent from the record high set on November 19, and has fallen for four straight weeks and is now more than 10 percent below its most recent high, putting it in what Wall Street considers a market correction.
And the benchmark S&P 500 has now slipped three straight weeks to start the year.
The stock fell 5.7% this week. This is the worst weekly fall since March 2020, when stocks were plunged by the pandemic.
Nancy Tengler (CEO of Laffer Tengler Investments) stated that investors continue to exacerbate the downturn volatility once it starts.
Technology sell-offs are affecting the country’s most powerful tech billionaires, including Elon Musk, Larry Page and Bill Gates. In the last week, they lost $67billion.
The biggest loss for Telsa CEO Musk was $25.1 Billion, which is more than 9 Percent, as per the Bloomberg Billionaires Index.
Television broadcasts stock market news at the Nasdaq Site in New York, Friday. Nasdaq Composite Index’s worst-ever start in more than a decade, and an $2.2 trillion market decline made it impossible for the index to have a better launch into 2022.
Tech-heavy Nasdaq has fallen 14.3 percent since November 19, when it set a record.
Bezos, Amazon’s founder and CEO, lost $19.9B for the week. His fortune has fallen to more than $24B since the beginning of this year.
Meanwhile, Bitcoin dropped again on Saturday and was last down around 4 percent for the day, hovering around the $35,000 level.
Bitcoin, world’s most popular cryptocurrency is about half of its peak November price of $69,000.
The price was $35,049 at the last time, having fallen to $34,000 on Friday and then falling sharply on Friday.
Wild price swings have caused currency to be hit. This is due to risk appetite falling on inflation fears, anticipations of more aggressive U.S. Federal Reserve interest rate increases and a lower probability of an increase in inflation.
With stocks dropping on Friday, other risk assets also fell. The S&P 500 and Nasdaq recorded their biggest weekly percentage drops since the start of the pandemic in March 2020.
Edward Moya is a senior analyst at OANDA for Americas. He stated that bitcoin fell as “crypto traders derisk portfolios following the bloodbath of stocks” and ahead of next week’s Federal Reserve policy meeting.
Moya stated that Bitcoin is still in danger and that if it breaks at $37,000, support will not be available until $30,000, on Friday.
Bitcoin is the most well-known and largest cryptocurrency in the world, with a peak of $69,000 in November.
Ether, which is a cryptocurrency linked to ethereum’s blockchain network, fell 6.7 percent on Saturday to $23,396
Although cryptocurrency markets may seem unrelated to equity, they are becoming more closely related to the stock market as institutional investors invest in the space.
After a strong year in 2021, there has been a shift in the stock market following inflation fears and concern about the effects of higher interest rates.
The popularity of technology stocks and companies that are consumer-oriented has fallen.
Energy is the only S&P 500 sector showing a gain; household good makers and utilities, which are typically considered less-risky investments, held up better than the rest of the market.
High raw material prices and supply chain challenges have caused companies from many different industries to increase the price of finished goods.
Many of these firms have advised investors that profit margins will continue to feel the pinch in 2022.
The S&P fell 5.7 percent this week, its worst weekly decline since March of 2020 when the pandemic sent stocks into a bear market
Grantham claimed that the US market is in a “superbubble” and could pop soon. The Fed raising interest rates could lead to a loss of $35 trillion value in the US market, Grantham stated.
Grantham is a British investor who some call a “permabear”. He claims markets were artificially supported by stimulus government and are about to collapse.
Grantham released a paper in which he claimed that the market may lose $35 trillion total in value if commodities, stocks, bonds and real estate return to historic norms in 2022.
Jeremy Grantham, a British bear sees a massive market crash
According to him, while markets were affected by the COVID pandemic’s onset, Federal Reserves guidelines helped them rally with lower interest rates. This made the market unflinching in the face of any external force, which he called ‘the vampire bear market’.
When prices rise steadily for a set period, it is called the bull market.
You stab it with COVID and then you fire it with the end QE [quantitative easing]Grantham wrote that the lure of higher interest rates would make it fly.
It is this: ‘Until, just like you are beginning to believe the thing is totally immortal, it eventually, possibly a little anticlimactically. Keels over and then dies.
Grantham blamed Federal Reserve and financial officials for the “superbubble” during the pandemic. They lowered interest rates, affected mortgage rates, and created a judiciously exaggerated view of real wealth.