Rate Squeeze Punishes Once-Triumphant Tech Stocks

Shares of the largest U.S. technology firms have fallen out of favor in the most pronounced way since the 2000 tech bubble, victims of a shift in investors’ tastes inspired by rising interest rates.
The 2022 market bust has turned the popular “FAANG trade”—the practice of buying fast-growing technology titans such as Facebook owner Meta Platforms Inc., Apple Inc., Amazon.com, Netflix Inc. and Google parent Alphabet Inc. into a pumpkin. Of those five companies, only Apple, down 12% this year, has outpaced the Nasdaq Composite Index’s 29% decline.

For years, portfolio managers were willing to overlook the occasional blemish in the tech giants’ quarterly results, reasoning that there were few alternatives at a time of generally slow economic expansion. That sort of patience has evaporated this year, as investors in Meta in particular can attest following the past week’s earnings-driven rout.

Friday’s report from the Commerce Department showed that prices rose 6.2% in September from 12 months earlier, the same year-over-year rate as in August.

Excluding volatile food and energy costs, so-called core prices rose 5.1% last month from a year earlier. That’s faster than the 4.9% annual increase in August, though below a four-decade high of 5.4% reached in February.

Earlier this month, the Labor Department’s Consumer Price Index showed inflation surged 8.2% in September. (WSJ)

➤Inflation Gauge Stays Painfully High

Wages and prices continued to rise rapidly in the late summer, keeping the Federal Reserve on track for more interest-rate increases as it attempts to cool economic growth and bring down high inflation.

The latest figures add to a picture of an economy losing some momentum but still growing as the labor market, consumer spending and price pressures remain strong. (NYPOST)


➤Wages Rose Rapidly in Third Quarter

The employment-cost index, a measure of worker wages and benefits, rose 5% in the third quarter from the same period a year earlier, the Labor Department said Friday, as employers competed for workers in a tight labor market. The gain marked a slight cooling from the second quarter when the index rose at its fastest annual pace in records dating to 2001.

Household spending also rose briskly in September, according to a separate Commerce Department report Friday. Consumers have continued opening their wallet despite income gains that haven’t kept pace with inflation, which is near a four-decade high. (WSJ)