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Tech stocks hit as questions abound heading into 2023

Tech stocks hit as questions abound heading into 2023

Markets are very much in holiday mode with very thin volumes and light liquidity.

This means we see choppy price action with swings between gains and losses in very quick time. Big trading desks at banks and funds are manned with skeletal staff so position sizing is minimal and new bets are not being taken until the new year.

The well-known Santa Rally in US stocks may struggle this year with the broader S&P 500 index closing lower by 0.4% after clawing back some early losses.


What does the "Santa Rally" typically look like?

  • The fabled festive move higher in stocks implies gains over the last five trading days of the year and the first two of the new year.
  • Returns over that period average 1.3% compared with 0.2% for any rolling seven-day trading period.

READ MORE: (December 22nd) Santa Rally coming to town?


Tech's tumble

Growth stocks were hurt yesterday by various factors including higher Treasury yields.

The tech-laden Nasdaq finished 1.4% lower with some individual megacap growth stocks especially hit by selling.

  • Apple finished 1.4% lower as worries still linger about covid-19 and its China production facilities. Earlier in the session, the tech giant hit their lowest point since June 2021. The June low from this year at $129.04 is strong support for the bulls.
  • Meanwhile, Tesla tanked again, plunging 11.4% and bringing the total of this month’s losses to nearly 44%. The worst month in at least 10 years has been brought about by the distraction for CEO Elon Musk running his new company, Twitter. A potential sales slowdown at the EV-maker has also not helped, with Reuters reporting that a reduced production schedule in China would be extended into January.
  • Some of the former darlings of the market have suffered hugely with Facebook parent Meta slumping 65% and once-all-conquering Amazon falling around 50%.

Investors are keen to see the 2022 exit door with the Nasdaq Composite tumbling close to 34% so far this year.


Key for the new year will be inflation and the Fed’s policy tightening path with questions around a recession or soft landing.

Research shows that a bear market has never bottomed before the start of a recession.



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