Tesla Swoons as Tech Stock Rout Deepens
February 23 2021 - 10:55AM
Dow Jones News
By Michael Wursthorn
The late February tech-stock rout deepened Tuesday, with the
Nasdaq Composite Index falling 3% and Tesla Inc. tumbling as much
as 12% as rising interest rates prompt a broad re-evaluation of
investor growth expectations.
The Nasdaq pullback puts the tech-focused index on track for its
steepest decline since Sept. 8. Tesla, whose 743% surge last year
highlighted the tech-led market rebound from the coronavirus
selloff, is now down for 2021 and has lost a quarter of its value
since the electric-car firm said Feb. 8 that it had spent $1.5
billion on bitcoin in a bid to boost returns on cash.
Other investor favorites were also hit hard in early trading.
Moderna Inc., the biotech maker of a major Covid vaccine, dropped
13%. Apple dropped 3.4% and Amazon.com Inc. fell 2%.
The tech firms have emerged as a favorite of the small investors
who have piled into stock and options trading over the past year,
with Nasdaq rising 44% in 2020. But the scale of the rally has
prompted concerns that many of the stocks are overvalued, making
them vulnerable to sudden slumps.
The rise in U.S. interest rates over the past week to a recent
1.37% on the 10-year Treasury note signifies expectations of faster
economic growth, which investors said reduces the relative
attractiveness of the tech firms compared with more economically
sensitive and less highly valued investments such as banks and
manufacturing firms.
"We're seeing a nasty, violent rotation," said Mike Bailey,
director of research at FBB Capital Partners, an investment manager
in Bethesda, Md. "A lot of the stratosphere stocks are getting
dragged down."
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
February 23, 2021 10:40 ET (15:40 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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