It may only be two weeks into the new year, but Wall Street’s decision to kick the tyres on the long tech rally has set a new tone.
After a rise supercharged by a pandemic-induced bump in digital spending, a correction like this looked overdue. This one has dealt a severe hit to some of the most overheated corners of the tech markets. Some of the emerging tech giants of recent years such as Nvidia and Salesforce, are off more than 20 per cent. But the impact has been far from uniform, and it is too early to tell if this is anything more than a short-term adjustment that sets a floor for another bounce.
Big Tech’s defensive qualities have again stood out. Through good economic times and bad, Wall Street has decided that backing this handful of companies is like putting money in the bank. Thanks to Apple’s end-of-year rally, the overall value of the five (which includes Microsoft, Alphabet, Amazon and Meta) has retreated only slightly since early November, when the tremors first passed through other parts of the market.