Investors Weather the Storm as Top Tech Stocks Plummet

Although the new year is only six weeks in, 2016 is turning out to be a challenge. Forbes states that the S&P 500 index (INDEXSP:.INX) has dropped by 10.5 percent since the year began, eliminating $1.78 trillion in value for investors. Broken down another way, that’s $57 billion lost per trading day.
Those stark statistics have been particularly felt in the tech sector, where Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) have both seen big losses. Here’s a look at the once-golden FANG stocks and how they are faring in this year’s difficult technology market.

What are FANG stocks?

FANG is an acronym used to describe four of the biggest — and typically best-performing — technology stocks. In order, they are Facebook (NASDAQ:FB), Amazon, Netflix (NASDAQ:NFLX) and Google (or, as it’s now called, Alphabet). Last year, investors turned to those stocks as “portfolio savers” — stocks that were sure to perform well.
According to another article from Forbes, average returns between the four stocks totaled 83 percent in 2015. Facebook, Amazon, Netflix and Alphabet all made the cut as top 10 contributors to the S&P 500’s returns last year, with Netflix claiming the status of top performer.

Challenging technology market in 2016

However, it seems as though these amazing returns won’t be recreated this year. Already, Amazon, the biggest loser, has seen a huge loss in value in 2016, shedding $85.6 billion year-to-date. Bank of America (NYSE:BAC) is in second place with $64.2 billion in losses. Meanwhile, fellow FANG stock Alphabet rounds out the top three, and has seen a $50.9-billion loss in value.
Netflix, meanwhile, has seen a 23.58-percent dip in share price since the start of the year. Facebook has fared better, with only a 2.53 percent year-to-date decline.

Reasons behind the decline and future outlook

While many investors have been startled by these declines, there are clear economic factors driving the downturn. Forbes suggests that the instability of the Chinese stock market and declining oil prices have both shaken investor confidence.
With that in mind, some people are now getting concerned that this drop in the stock market will drag the US economy into a recession, as investors tighten their belts and their spending after six weeks of losses on the stock market. That said, it’s important to remember that declines have come after a period of enormous growth in the technology market, rendering the $1.75-trillion loss much less significant in the long term.