US tech stocks fall amid fears of a looming recession

Global markets sold off sharply on Friday as fears of a potential U.S. recession intensified, with technology stocks bearing the brunt of the decline.

The crisis began in Asia, where Japan’s Nikkei fell 5.8%, quickly spreading to European markets before threatening to engulf Wall Street. This widespread market turbulence has raised concerns about the health of the global economy and the effectiveness of current monetary policy.

US tech stocks sell off, recession fears loom

The technology sector faced significant pressure as investors reacted to disappointing earnings reports and growing economic uncertainty.

Intel (NASDAQ: INTC) shares fell more than 20% in premarket trading after the company announced job cuts and a dividend suspension. Nvidia (NASDAQ: NVDA), a key player in artificial intelligence chips, saw its shares fall 3% premarket. European tech stocks were not spared, falling 4.6% as the sell-off gained momentum.

Several factors have contributed to growing fears of a U.S. recession. A weaker-than-expected survey of U.S. factory activity released Thursday raised concerns about the health of the manufacturing sector. Speculation is also growing that the Federal Reserve may have kept monetary policy tight for too long, potentially stifling economic growth.

Market participants are closely monitoring the upcoming US nonfarm payroll report, anticipating a slowdown in job growth that could further intensify recession fears.

VIX Rise Reflects Market Anxiety

The CBOE Volatility Index (VIX), often called Wall Street’s “fear gauge,” rose 15.26% to 21.42 in pre-market trading on Friday. The significant rise in the VIX reflects investors’ heightened concern about market volatility and economic uncertainty. The pre-market spike suggests a nervous mood among traders ahead of the start of the regular trading session.

Despite the bleak outlook, some analysts say the current situation could signal a slowdown rather than a full-blown recession. They point to positive factors such as lower interest rates, falling inflation and rising real wages as potential stabilizing forces for the U.S. economy. But as global markets react to economic indicators and corporate earnings, investors remain cautious about the path forward for both the technology sector and the broader economy.

Disclaimer: The author does not own or have any interest in the securities discussed in the article.

About the author

Tim Fries is the co-founder of The Tokenist. He holds a BS in Mechanical Engineering from the University of Michigan and an MBA from the University of Chicago Booth School of Business. Tim was a senior associate in the investment team at RW Baird’s US Private Equity practice and is a co-founder of Protective Technologies Capital, an investment firm specializing in sensor, protection and control solutions.