After the record-breaking gains on Wednesday, tech stocks fell once again on Thursday. Apple, Amazon, and Facebook all fell, giving up a combined 8.8% of their value. After massive gains earlier this year, investors have placed bets on these companies to keep growing and rake in profits. Some companies like Zoom Video Communications have even been given lofty market values.
Tech stocks have made massive gains this year
Since the start of the year, tech stocks have been on an upswing, but that trend has come to an abrupt end with the recent stock market turmoil. Fears of inflation, higher interest rates, and pandemic recovery have all led to a decline in tech stocks. In addition, the equities market has become more volatile, and Russia’s invasion of Ukraine is causing more headwinds for tech stocks.
Apple, Google, and Microsoft have topped the list, with each stock seeing gains of over 50 percent. Amazon, Facebook, and Tesla all made solid gains. The Nasdaq 100 (a diversified index of the largest non-financial companies) has been up by nearly a third in the past year alone. Alphabet, which gets most of its revenue from advertising, has held up well during recent inflationary concerns. Google’s cloud infrastructure unit has also picked up some business from people who work from home.
Banks must abide by KYC and AML laws, and they must assess suspicious transactions to ensure that they do not involve money laundering. Currently, bank systems aren’t sophisticated enough to distinguish between legitimate transactions and illicit ones. They can only process a small sample of data and make a few connections. This can result in large fines and other legal penalties. If tech companies fail to comply with KYC and AML rules, they may face criminal prosecution.
Non-compliance with AML rules can cost organizations a great deal. In 2016, a global fine for non-compliance topped $14 billion, with banks Goldman Sachs and Westpac leading the way. Non-compliant companies risk civil and criminal sanctions, as well as losing their reputation. Financial institutions have dedicated AML specialists, as does the Financial Crimes Enforcement Network. The FCENET utilizes high-tech methods to catch money launderers.
After a dramatic rally last week, investors are now pricing in a return to normalcy, and Netflix and other pandemic favorites have fallen to new lows. The decline began after Netflix and Peloton reported disappointing earnings, and spread to a broader stay-at-home sector. Analysts are assessing that the new variant of the coronavirus, known as Omicron, will not produce the same economic headwinds as the first strain, which was discovered in China.
Earlier this month, the U.S. government warned that there was a new variant of the coronavirus on the loose. The news caused stock market panic and the Dow plunged more than nine percent. The news coincided with Black Friday, the traditional start of the holiday shopping season. Retailers and travel-centric companies were hoping for a return to normal after last year’s pandemic. Tech stocks declined by 5% on Friday and fell even more on Monday.
Europe’s troops massed on Ukraine’s border
As the war in Ukraine rages, it is imperative that European Union countries rally behind their Ukrainian allies and their people. Poland, the Czech Republic, and Slovenia’s prime ministers visited Kyiv on Tuesday to express their support for Ukraine. The crisis accelerated after Russian warplanes attacked a Ukrainian military base near the Polish border on Sunday, killing 35 people. The attack brought the conflict dangerously close to the borders of NATO nations. While the early fighting in Ukraine was largely contained to the western part of the country, Russia has increased its airstrikes there in recent days, including a military base.
Despite this apparent unpredictability, the conflict is far from over. Ukraine had been taking steps to disconnect from its Soviet-era energy grid and was aiming to link up with its western neighbors. Even the day before the Russian invasion, Ukraine was testing its energy system to make sure it could support its citizens. Moreover, Ukraine’s connection to the rest of Europe’s grid was initially scheduled to be completed in 2023.