Spring hasn’t been kind to stock-market highfliers.
The sectors that benefited most from the pandemic-inspired shift to working from home have fallen hard since late January, as rising interest rates pushed investors into investments promising surer returns. Hot technology firms and blank-check merger companies have tumbled from their highs, pushing the Nasdaq Composite Index down 8% from its latest record close last month.
Exercise bike maker Peloton Interactive Inc. is off 39% from its mid-January high, partly reversing its fivefold gain last year. Virtual-care services provider Teladoc Health Inc., which more than doubled last year, has slid 44% from its mid-February high. Tesla Inc., possibly the most prominent beneficiary of last year’s stimulus trade, has shed more than $250 billion in market value since Jan. 25.
But the carnage hasn’t been limited to tech. Lately, the firms that were supposed to benefit from the economy’s reopening have slumped, too. The Russell 2000 index of smaller stocks has fallen 8.5% from its March 15 high. Tupperware Brands Corp. has fallen 37% from its Jan. 11 high after more than doubling last year. Watchmaker Fossil Group Inc., up 173% between the end of December and Jan. 27, has fallen 528% from its high.
The pullbacks are noteworthy as the broad market indexes continue to trade near record highs. Many portfolio managers believe the outlook for stocks remains good, with the economy expanding at a healthy clip, U.S. vaccination efforts gaining momentum and interest rates still very low.
