MarketWatch.com:
To say it has been a rough start for the technology-heavy Nasdaq Composite Index may be the understatement of the young year.
The Nasdaq Composite COMP, -2.72% was off about 11% on Friday since the start of 2022, at last check, marking a double-digit decline in the year’s first 14 sessions. The tumble has the index on track for its worst start to a year since 2008 when it tumbled 13.6% in the first 14 trading days, according to Dow Jones Market Data.
On top of that, the Nasdaq is now looking at its worst January performance on record, dating back to the index’s inception in 1971.
| Date | %Change |
| 01/21/2022 | -11.29* |
| 01/31/2008 | -9.89 |
| 01/31/1990 | -8.58 |
| 01/29/2016 | -7.86 |
| 01/30/2009 | -6.38 |
| 01/29/2010 | -5.37 |
| 01/31/2005 | -5.20 |
| 01/31/1978 | -4.01 |
| 01/31/1973 | -3.99 |
| 01/29/1982 | -3.80 |
| Source: Dow Jones Market Data *incomplete month |
Nearly everything that could go wrong for the benchmark has, thus far. It is currently in the throes of a correction, after completing a decline of at least 10% from a recent peak, meeting the commonly used definition for an asset correction in Wall Street parlance. The benchmark last entered correction on March 8, and it currently stands 13% from its Nov. 19 record peak, while also closing in on a bear market, which is a decline of at least 20% from a peak.
The equity gauge also breached its 200-day moving average, which it hadn’t previously done since April of 2020, adding to a series of bearish signals for the Nasdaq Composite and highlighting the pain endured by investors in technology and growth-oriented investments. Moving averages are used by market technicians to help determine bullish and bearish momentum in an asset, and a trade beneath the 200-day long-term average is often viewed as a the dividing line between a short-term bearish trend and a long-term one.
To be sure, the equity market more broadly is being sold by investors as risk appetite evaporates. However, tech investments have been dealt deeper losses. The Dow Jones Industrial Average DJIA, -1.30% is down 5.5% in January, and the S&P 500 index SPX, -1.89% is off 7.4%, as they trade 4.4% and 5.4%, lower for the week thus far.
Indeed, the equity market has been under siege at least partly because of the prospect of multiple interest-rate increases from the Federal Reserve, which meets again Tuesday and Wednesday. Higher rates can have a chilling effect on investments in speculative segments of the market that rely heavily on borrowing, with investors discounting future cash flows. Talk of inflation also has put a damper on the market and is one of the key reasons compelling the U.S. central bank to change from a regime of easy-money to one of policy tightening.
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