This post was originally published on this site
The rally in technology stocks all year has slammed on the breaks following a downgrade of the U.S. credit rating from Fitch late Tuesday, and by Thursday, semiconductor and software stocks were still selling off, setting up the prospect of a correction.
The last time the U.S. credit rating got downgraded, Apple Inc.’s
AAPL,
Steve Jobs was busy pitching the new iCloud service while preparing to leave the company he founded for a second time. This time around, Fitch Ratings lowered its rating of U.S. government debt to AA+ from AAA, and Apple, which reports earnings after the bell Thursday, has seen shares decline nearly 2% since the downgrade.
Flashback to August 2011: The top 10 events that shaped a bear of an August
On Aug. 5, 2011, Standard & Poor’s downgraded the U.S. debt rating from triple-A, but that followed markets already in decline where the S&P 500 index had shed 7.2% in the previous week. By the end of that month, the S&P 500 Information Technology Sector Index
SP500.45,
had fallen more than 6%, and fell another 3.4% in September before rebounding by the end of October, according to Dow Jones data.
Also, by the end of August 2011, the PHLX Semiconductor Index
SOX
had dropped 8.1%, the iShares Expanded Tech-Software Sector ETF
IGV
fell 7.1%, the S&P 500 index
SPX
slid 5.7%, the Nasdaq Composite
COMP
fell 6.4%, and the Dow Jones Industrial Average
DJIA
fell 4.4%.
A tech stock decline this August would bring to a halt a seven-month streak of gains that hasn’t been seen in almost a decade, as the prospect of gains from artificial intelligence software has been a driver all year even with the specter of a potential recession.
Month to date, shares of Nvidia Corp.
NVDA,
— which reports on Aug. 23 and has seen its stock more than triple this year — and other hot chip stocks like Marvell Technology Inc.
MRVL,
and Lam Research Corp.
LRCX,
have declined more than 4%, while Advanced Micro Devices Inc., which is up 76% year to date, is down 0.5% for August so far.
Read: Warren Buffett dismisses Fitch downgrade: ‘There are some things you shouldn’t worry about’
On the software side, Microsoft Corp.
MSFT,
and Oracle Corp.
ORCL,
shares are down more than 2% for the month so far, while Adobe Inc.’s
ADBE,
have slid 3%, and Salesforce Inc.
CRM,
shares have dropped 4%, and shares of cybersecurity company Palo Alto Networks Inc.
PANW,
have fallen nearly 6%, according to FactSet.
And, as forecast, September 2011 wasn’t any better, but tech stock losses weren’t as bad as the broader market as the SOX index fell another 4.8%, and the IGV declined 4.9%, while the S&P 500 dropped 7.2%, the Nasdaq fell another 6.4%, and the Dow Average fell 6%, according to FactSet data.
In the meantime, the SOX index is still up 46% year to date this year, the IGV index is up 37%, while the S&P 500 has grown 17%, and the Nasdaq has rallied 33%.
