The ongoing crash in growth stocks deepened in pre-market trading on Friday, as investors dumped high-flying tech stocks and sought shelter in companies that would benefit from higher commodity prices.
Businesses that were once pandemic darlings fell before the opening bell.
Peloton Interactive sank 1.4%, Zoom Video Communications Inc. sank 0.8%, and Wayfair sank 0.4%. Big-cap tech companies were also out of proportion, as investors dumped shares of Alphabet Inc. Google’s parent company, Meta Platforms Inc.
Market volatility this year has forced investors to retreat aggressively from pandemic-era bets as money managers grapple with the impact of higher interest rates. When bond yields rise, it reduces the attractiveness of stocks whose dividends are expected to come far in the future.
Many investors have turned to companies that will benefit from this year’s commodity boom. That dynamic was shown again on Friday. Among the top pre-market winners were Marathon Oil and steelmaker Nucor, both of which rose more than 1.5%.
A team of Deutsche Bank strategists led by Jim Reed, head of thematic research, attributed Thursday’s volatility to a growing realization among investors that the Federal Reserve was unlikely to be able to rescue the market, according to a research note on Friday. During times of turmoil, some investors have to anticipate what is known as the Federal Reserve’s position, or the tendency of the Federal Reserve to cut interest rates or delay rate increases in response to market turmoil.
“I can only think that a good deal of the reaction yesterday was the appreciation that while the Fed can issue calming statements, they are starting from a very difficult starting point, and limited flexibility to respond to market or economic concerns while they fight inflation,” the note said. .