What happened

Shares of Apple (AAPL 0.42%), Meta Platforms (META -0.68%), and Salesforce.com (CRM -0.99%) were plunging today, down 5.6%, 6.8%, and 7.9%, respectively, as of 2:05 p.m. ET. There wasn't any material news out of these companies today, although Apple did announce it was leading an initiative to implement passwordless sign-in open standards for the web. In addition, news out of the European Union suggested stiffer rules for big tech, and potential penalties could be in the offing.

More likely, these companies fell in sympathy with an overall market decline, with the S&P 500 index falling 3.7% and the tech-heavy Nasdaq Composite down a whopping 5.2% as of 2:06 p.m. ET.

So what

One could probably chalk today's market decline to a reversal from yesterday's big rally. Yesterday, the Federal Reserve released its minutes for its May meeting. The Fed hiked interest rates 50 basis points, as expected, and also announced plans for a gradual reduction in its balance sheet of Treasuries and mortgage-backed securities.

The market likely rallied because Chairman Jay Powell said the Fed was not yet considering a higher 75 basis-point hike at the next meeting, which some had feared. In addition, perhaps the gradual ramping up of balance-sheet reduction calmed the nerves of the markets, which were expecting the Fed to slam even harder on the brakes.

After a relief rally, there's usually a reversion back to skepticism. Investors are now likely turning their attention to the next inflation reports, which come out next week. If inflation stays high, the Federal Reserve may have to move faster, which could increase risks of a recession.

A first-time jobless-claims number also came out today, showing first-time claims ticked up above 200,000. That was higher than expected, although unemployment is still very low by historical standards. Still, the above-consensus number likely alerted some investors that the Fed could be hiking into a slowdown.

High inflation and higher interest rates also hurt the intrinsic value of high-growth stocks with their earnings well into the future. So even as bad as Apple, Meta, and Salesforce were today, the high-growth Cathie Wood-like stocks were down even more.

Still, often times, "tech" is painted with a broad brush, even though Meta Platforms trades at a bargain-basement valuation of 15.9 times earnings and Apple trades at a reasonable 25 times earnings. It's not surprising that Salesforce is down more than the others, as it trades at 116 times earnings, although just 37 times earnings based on forward estimates.

There could also be some hedge fund liquidations today. This could occur if funds are now forced to sell stocks due to higher rates on margin loans or a tidal wave of investors are asking for redemptions.

In terms of the news, Apple, in conjunction with Alphabet and Microsoft, announced they would work together to expand support for passwordless sign-ons across websites and apps. This is based on standards created by the FIDO Alliance (the Fast Identity Online non-profit for web security) and the World Wide Web Consortium. The consortium aims to grow more secure solutions such as fingerprint, face, or device PIN number sign-ins, as passwords have become cumbersome and a growing security liability in recent years.

European lawmakers also recently proposed regulations that could force Apple to open up its devices to other third-party payments systems besides Apple Pay. The EU is even contemplating a large fine on Apple for failing to provide access to other digital wallets in the past. European Commission Executive Vice President Margrethe Vestager said, "We have indications that Apple restricted third-party access to key technology necessary to develop rival mobile wallet solutions on Apple's devices."

Big tech has regularly been subjected to hefty fines from the European Union, and it looks like another could be coming. It's obviously not a great time for Apple and other tech companies for that to happen, given recent supply chain woes and fears over a consumer device demand slowdown.

Young woman looks worried at her phone.

Image source: Getty Images.

Now what

It's hard to know what to do with all-star large-cap tech companies today. They're not unprofitable, like so many high-growth software, electric-vehicle, and meme stocks. The three I've previously mentioned are also reasonably priced, given their scale and growth potential as the world continues to digitize.

Today and the upcoming months could continue to be volatile, as every month will bring new inflation data, which will spur a debate over whether or not we might have a recession. And the ongoing war in Ukraine provides even more uncertainty.

However, for highly profitable, cash-rich tech companies with large moats and solid growth outlooks, such as these three names, this marketwide pullback is likely going to turn out to be a good long-term buying opportunity. Investors in these names should probably hold on over the summer, while those without a position who have a longtime horizon may wish to think about scaling gradually into owning these stocks.