What happened
Shares of Adobe (ADBE +0.64%), Meta Platforms (META 0.82%), and Netflix (NFLX +3.25%) were all tumbling today after the latest U.S. Bureau of Labor Statistics report showed that inflation increased faster than expected in August.
Investors had been hoping for inflation to show signs of slowing down, but the increase in costs reminded everyone that it is not yet tamed. As a result, investors sold off shares across the board in the technology sector.
As of 12:13 p.m. ET today, Adobe fell by 5%, Meta plummeted 7.3%, and Netflix was down by 6.2%.
So what
Investors in these large tech companies took the latest inflation data pretty hard, and I don't blame them. The consumer price index increased 0.1% in August and 8.3% for the year. Some economists were expecting monthly inflation to fall by 0.1% and for the year-over-year inflation rate to fall to 8%.
Image source: Getty Images.
Unfortunately, those optimistic estimates didn't materialize, and Abode, Meta, and Netflix investors took notice.
Tech stocks have been particularly volatile when it comes to inflation data as investors worry that rising inflation and increasing costs will make it more expensive for companies to borrow money and invest in new areas of growth.
In addition to inflation concerns, Adobe's stock is also likely falling today after BMO Capital analyst Keith Bachman downgraded the company's stock to a market perform rating, down from outperform. Bachman said that he thinks the company's Creative Cloud service will see reduced demand.
The downgrade comes just one day after Mizuho analyst Gregg Moskowitz also downgraded Adobe's stock and cut his price target for Adobe to $440 from $480.
Additionally, Meta's stock may also be sliding today as investors react to comments from Piper Sandler analyst Thomas Champion saying that advertisers may still be skeptical of the company's Facebook platform and that TikTok could continue to take social media market share.
NASDAQ: ADBE
Key Data Points
Champion lowered his price target for Meta yesterday from $190 down to $175.
And finally, some Netflix investors may be reacting to the fact the streaming giant took home just three primetime Emmys last night, compared with rival HBO's 13. Netflix won a total of 26 Emmy Awards this year, while HBO took 38. Last year, Netflix easily beat HBO.
Investors have been disappointed with Netflix's lack of membership growth lately, and the streaming service being bested by HBO in awards doesn't bode well for the company.
Now what
Nearly the entire market took a hit today after the inflation data was published, so it's not surprising to see Adobe, Netflix, and Meta stocks falling today. And with the recent downgrades for Adobe and Meta stock, and Netflix losing some awards to a rival, it's no wonder why these tech giants are tumbling today.
With inflation still stubbornly high, the Federal Reserve is likely to raise the federal funds rate by an additional 75 basis points when it meets next week, which could potentially put even more pressure on tech stocks in the near term.
