At time of writing, shares of Netflix, Inc. [NASDAQ:NFLX] are down 8.4% as it got caught up in a major sell-off in the US.
It will open tomorrow’s trading (US time) at $325.89, with another fall potentially in the offing.
Here is Netflix’s one day chart:
Tech stocks share price hurt amid rising volatility
Netflix was not the only big-name tech stock to suffer losses, with Apple (-4.6%) Facebook (-4.1%) and Amazon (-6.1%) also being hit hard.
The sell-off was the largest one-day loss since February.
Perhaps one of the reasons that Netflix and others fell is that tech stocks are generally perceived as riskier than other stocks.
Meanwhile the CBOE Volatility Index, which is a measure of ‘fear’ in the market, climbed to its highest level since early April.
As you can see a major spike over the last week…
What caused this sell-off?
There are two main factors involved.
The first is that interest rates on US Treasury Bonds are at their highest level since 2011.
Meanwhile the expectation that the Federal Reserve will raise interest rates over the next year has people worried about liquidity i.e. the ability of firms to access money.
One portfolio manager described the day’s events:
‘It’s a bit of a bloodbath today, clear risk-off action with few places to hide.’
Also in the background are factors such as the Italian debt problem, China’s slowing growth and rising oil prices due to the possibility of new sanctions against Iran.
Australian traders will have a lot to ponder today.
For Markets & Money