Treasury Yields To Blame for Dip in FAANG Stocks, Expert Claims ‘Their Achilles’ Heel Is Higher Rates’

Tel Aviv, ISRAEL - May 28 2020 : FAANG Big Tech icons (Facebook, Amazon, Apple, Netflix & Google). FAANG is an acronym Of the 5 strong stocks in the Nasdaq technology stocks index. stock photo
MagioreStock / iStock.com

Amazon stock fell 2.9% on Monday, Oct. 4, its sixth straight drop in as many days. It bounced back slightly from its close price Monday evening of $3,189.78 to open at $3,204.50. Similarly, Apple has entered a correction period, with its stock down 3.1% on Monday.

Learn: What If You Had Invested In Amazon Stock Instead of an Amazon Prime Membership?
Compare: What If You Had Invested In Apple Stock Instead of Buying the First iPhone?

Facebook also didn’t fare well on the market Monday, in part due to a global outage of Facebook, Instagram and WhatsApp. The stock dropped 15% from its high in the first week of October.

Together, the biggest tech stocks — Apple, Microsoft, Amazon, Alphabet Inc. (holding company for Google), and Facebook — lost $300 billion in market value with last week’s dips, Bloomberg reported.

Related: Zuckerberg Took $7 Billion Loss Within Hours Due to Facebook Outage — How Could Stock Be Affected?

Overall, the NYFANG+ index, which includes the FAANG stocks and ten other “highly liquid tech and internet stocks,” is down more than 9% in the past month, according to Bloomberg. Tesla is the only stock in the index holding tight in the black for the time period, although all except Amazon remain positive for the year.

Building Wealth

Bloomberg reported that high treasury yields have hurt the outlooks for companies with high valuations. At press time, Amazon has a market cap of $1.65T. Investors predict that future earnings for companies like Amazon and Apple will be less valuable amid inflation pressures and high U.S. treasury bond yields.
“Their Achilles’ heel is higher rates,” Mike Mullaney, director of global market research at Boston Partners, told Bloomberg.

See: Warren Buffett Invests $1.1 Billion in Apple Stock: Should You Invest Too?
Find: Mark Cuban Reveals Why He Owns More Amazon and Netflix Than Any Other Stock

In spite of the threat of continued rising yields, Wall Street analysts still view the tech giants as a solid investment. Amazon is still rated as a “buy” from all 58 analysts who cover the stock, while 75% of analysts still rate Apple as a “buy,” according to Bloomberg.

Last updated: October 5, 2021

About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.