technology

Wall Street Weekly: Technology Stock Sell-Off Disrupts The Market

A significant sell-off of technology stocks on the U.S. exchanges last week has shaken investor confidence, prompting a shift in focus towards upcoming employment data for insights into the resilience of the American economy. Should the labor market remain robust, it may heighten existing inflation concerns exacerbated by President Donald Trump's policies. The nonfarm payroll (NFP) report for January 2025, set to be released next week, will serve as a crucial indicator of whether the labor market continues to be strong despite the economic pressures from high interest rates. The Federal Reserve maintained interest rates on Wednesday, citing ongoing economic growth and inflation levels that have yet to return to the 2% target. 

Investors are also wary of the potential for an overheating economy, which could reignite fears that Trump's trade and immigration policies might lead to a surge in inflation. Previously, Wall Street's stock market experienced a downturn following the December employment report, which bolstered expectations that the Fed would adopt a cautious approach to interest rate cuts this year.  

"The employment report will be pivotal in determining whether the labor market remains strong without triggering broader inflationary pressures, particularly in the services sector," stated Tony Rodriguez, head of fixed income strategy at Nuveen, as reported by Reuters on Monday, February 3, 2025. Throughout the past week, technology stocks faced turbulence after the Chinese startup DeepSeek unveiled a low-cost artificial intelligence (AI) model, raising concerns about the inflated valuations of major U.S. tech companies. Although the market has begun to recover, the sell-off has dampened investor optimism regarding the economic outlook in the U.S. Mark Hackett, chief market strategist at Nationwide, noted that investors are confronted with mixed data this week, ranging from news about AI, Trump administration policies, the FOMC meeting, to earnings reports, resulting in market volatility. 

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