The U.S. equity markets experienced another round of sell-off yesterday as inflation data for the month of August was higher than analyst projections. Inflation for August stood at 8.3%, compared to estimates of 8%. According to the Bureau of Labor of Statistics, higher shelter and food costs offset a decline in gas prices last month.

The tech-heavy Nasdaq fell 5%, while the S&ampP 500 and Dow Jones Industrial Index declined by 4.3% and 4%, respectively. Every single stock in the Nasdaq 100 index traded in the red yesterday for the first time since 2020.

And when the U.S. sneezes, the world catches a cold. Most world indices are also trading lower today.

Japan’s Nikkei 225 Index is down 2.5%

Hong Kong’s Hang Seng Index is down 2.6%

Australia’s S&ampP/ASX 200 Index is down 2.5%

India’s Nifty 50 Index is down 0.8% 

Tech stocks such as Meta Platforms (NASDAQ: META) and Nvidia (NASDAQ: NVDA) were also down by 9.4% and 9.5%, respectively, yesterday. Let’s see what impacted these tech stocks on September 13.

 

Meta stock price is down 60% in the last year 

Meta Platforms is among the worst-performing stocks in the S&ampP 500 and is trading 60% below all-time highs. The social media giant has been wrestling with multiple factors, including privacy issues, the broader market sell-off, lower ad spending by enterprises, and a challenging macro environment.

Earlier this week, The Wall Street Journal or WSJ claimed Meta’s Instagram Reels is fast losing ground to TikTok.

The report states that Instagram users spend 17.6 million hours each day watching Reels which is much lower than the 197.8 million hours clocked on TikTok. One of the most followed publications by investors, WSJ accessed an internal report which stated engagement for Reels fell 13.6% in August compared to the previous four weeks. 

According to WSJ, Instagram is struggling to recruit users who create content. While Instagram has 11 million creators on its platform in the United States, around 2.3 million post on the social media platform each month.

Reels was launched in August 2020 to compete with the rising popularity of TikTok. It now accounts for 20% of the time users spend on Instagram. Further, Reels generates over 50% of the content that users share with each other on Instagram via private messages. 

In addition to lower user engagement, Meta has to wrestle with privacy changes made by Apple (NASDAQ: AAPL) to its iPhone operating system, limiting the former’s ability to deliver personalized ads. In Q2, Meta reported its first-ever decline in quarterly sales, thereby accelerating the sell-off among investors.

 

Nvidia stock price is down 61% from all-time highs 

Shares of Nvidia, one of the largest semiconductor companies in the world, are trading 61% below all-time highs. The sell-off accelerated in recent days after the U.S. government restricted Nvidia from selling some of its most popular AI chip designs to China. Nvidia expects the restriction to lower its revenue by $400 million in the next quarter.

There are several other headwinds impacting the company that includes a downcycle in chip sales. Additionally, the trade war between the U.S. and China might gain momentum once again, aggravating the downturn. The ongoing bear market surrounding the crypto segment will reduce demand for chips used to manage blockchain networks.

Further, COVID-19-related lockdowns in China will impact demand for gaming chips. Nvidia has also suspended sales to Russia during the ongoing war. Lastly, Ethereum, the second largest blockchain network globally, is migrating to a proof-of-stake validating mechanism, eliminating the need for advanced computing devices. 

Despite these challenges, analysts expect Nvidia stock to gain over 50% in the next 12 months.

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