Get best of the week

What keeps the stock market from a large-scale fall and what does the technology company have to do with it?



The coronavirus pandemic has caused a massive economic crisis around the world. However, so far the fall in the stock market as a whole has not been panic - the largest US stock indices in recent years have been at lower values.

Against the backdrop of serious problems faced by public organizations from many sectors (for example, air carriers), technology companies are largely holding the market from a large-scale decline.

The main losers of the pandemic period


One of the most affected segments is airline stocks. Shares in organizations such as Delta Air Lines and Southwest Airlines dropped significantly amid falling demand for transportation.



Financial companies such as Bank of America and American Express are not feeling very well - their incomes have declined in recent months, and securities have also fallen in price since the reports.

In particular, investments in companies in these sectors incurred losses of investment company Warren Buffett Berkshire Hathaway - in the first quarter of 2020, the company lost $ 49.7 billion.

Growth of technology companies offset market decline


During quarantine restrictions, the demand for the services of many technology companies has grown, and as a result their shares have risen in price. So in early May, in the week when American Airlines shares fell by more than 5%, Microsoft and Netflix shares grew by 2.4% and 3%, respectively. Securities Apple and Facebook also rose in price.



Demand for the services of many IT companies grew during the quarantine period. The massive shift to remote work put office employees in need of buying additional equipment - this increased the income of manufacturers (Microsoft). People who are forced to spend a lot of time at home actively watch TV shows and play games - this has a good effect on the shares of streaming services and game dev companies.

Is everyone doing well


No, there are also victims in the technology sector - for example, Airbnb is forced to cancel large-scale projects to launch penthouse rentals at the Rockefeller Center in New York and carry out reductions.

Taxi services Uber and Lyft also faced a decline in demand against the background of quarantine. This led to the fact that Uber is undergoing large-scale reductions - the company laid off 3,500 people (and also lost CTO), Lyft also announced a reduction of almost 17% of its staff.

What does all this mean for beginner investors


The current market situation shows the importance of observing the principles of building an investment portfolio. We wrote about this in one of the previous articles . In short, beginning investors after opening an account and training on test access should follow a few basic rules:

  • A financial strategy should take into account the availability of free assets and risk tolerance - if the investor has few own funds, and he understands that it will be difficult to survive drawdowns on the account, then aggressive trading strategies will not be the best choice.
  • – , (, , ..), ( ), , .
  • – ETF, .
  • – ( ), , , , .

, Telegram- ITI Capital

More articles:


All Articles