This week, Alphabet Inc’s stock price fell 5.4%, while Microsoft Corp’s stock price fell 6.6%.
Alphabet Inc. fell on Friday and Google’s parent company expanded its losses, resulting in its worst weekly performance since the beginning of the Covid-19 pandemic.
The stock price fell 0.5% for the fourth consecutive day of decline. This week it fell 5.4%, the biggest weekly drop since March 2020. Microsoft rose less than 0.1% at the close on Friday, but fell 6.6% in a week.
The weekly sharp drop occurred when U.S. bond yields soared, which placed general pressure on high-growth companies. The U.S. 10-year Treasury bond yield climbed to around 1.77% on Friday, the highest level since January 2020. It had fallen below 1.4% in December. Higher interest rates are seen as a headwind for high-growth and relatively expensive stocks because they reduce the present value of future earnings.
Friday’s trading was also affected by the latest employment report, which showed a decline in unemployment and an increase in wages.
Among them, Apple Inc. rose 0.1% on Friday, Amazon Inc. fell 0.4%, and Meta Platforms Inc. fell 0.2%.
The iShares Expanded Tech-Software Sector ETF fell 0.8%. It fell 8.8% this week, the biggest drop since March 2020. The scale of recent weakness has allowed some analysts to see the value of the industry. Goldman Sachs wrote that given its optimistic view of demand trends in 2022, “the group may be oversold”.
For Microsoft and Alphabet, the start of 2022 is a year after the two companies have significantly outperformed the market. Alphabet rose 65% during 2021, more than double the nearly 27% return of the Nasdaq 100 index. Microsoft rose by more than 50% last year. This is the 10th consecutive year that it has achieved positive growth and the 9th consecutive year that it has achieved double-digit growth.
(Updated when the market closes.)