On Feb. 19, U.S. stocks closed at a record, led by four tech companies that were each worth comfortably over $1 trillion at the time.
What a difference a month makes.
As of the close of trading on March 19, those four companies — Apple, Microsoft, Amazon and Alphabet — along with Facebook have lost a combined $1.3 trillion in value since the market peaked. The broader S&P 500, even after gaining 0.5% on Thursday, has plunged by 29% in the past month, as the spread of the COVID-19 coronavirus threatens to send the global economy into a tailspin.
The Seattle area, home to Microsoft and Amazon, and the San Francisco-Silicon Valley corridor, where Apple, Alphabet and Facebook are based, have been two of the hardest-hit areas in the nation in terms of COVID-19 outbreaks. In San Francisco and surrounding counties, residents have been ordered to shelter in place since Tuesday, while schools and businesses across Seattle have closed.
Investors are selling off just about anything and everything in the stock market, with some analysts indicating that a recession is already here.
Hedge fund manager Bill Ackman of Pershing Capital predicted on Wednesday that "hell is coming," and urged President Trump to shut down the country for 30 days. Tech stocks led the 11-year bull market coming out of the financial crisis and many are now firmly in bear market territory.
Initially, as the coronavirus emerged in China and threatened the supply chains of companies dependent on Chinese manufacturing, hardware providers warned of at least a temporary slowdown. Apple said in mid-February that iPhone supply issues and reduced Chinese demand would hurt quarterly results. In late February, Microsoft said it would miss quarterly guidance, because its "supply chain is returning to normal operations at a slower pace than anticipated"
But with businesses in some of the biggest U.S. markets being forced to shutter and unemployment expected to spike, the COVID-19 crisis is headed straight for consumers' wallets. Apple said over the weekend that it will close all of its stores outside of Greater China until March 27. Michael Walkley, an analyst at Canaccord Genuity, on Thursday cut his stock price target on Apple to $300 from $345.
"Following last month's COVID-19 pre-announcement reductions to our estimates, we are further lowering our estimates given expectations for continued soft near-term results given the prolonged impact through at least Q3/F'20 on global smartphone supply and demand," Walkley wrote. He maintained his buy rating on the stock.
The impact is widespread. Amazon has reported confirmed cases of the coronavirus in warehouses, including one in the U.S., which led to the temporary closure of the facility in New York. The company has also temporarily closed its Prime Pantry delivery service as it faces a surge in orders tied to the coronavirus outbreak.
Google and Facebook, meanwhile, are reliant on online ads, and marketing departments tend to cut their budgets when the economy slows.
However, even as the biggest tech companies suffer with the rest of the market, they're still generally viewed as sound long-term businesses that will rebound after the pandemic passes. Michael Pachter of Wedbush Securities told clients this week that the firm was adding Amazon and Facebook to its investment committee's "best ideas list."
With Amazon, Wedbush expects the e-commerce giant to "gain meaningful market share across a number of verticals in a multitude of countries" because "consumers appear to be spending more of their time and money shopping online in order to avoid crowds" and follow the rules.
And as more people turn to the internet for information about the coronavirus, Facebook is attracting more eyeballs, according to Pachter.
"Given the seemingly unprecedented and unrelenting volume of news related to the global pandemic, the reliance that a large percentage of the world's population has on Facebook as its primary source of information, and an increasingly-pervasive stay-at-home attitude accentuated in some instances by the government, we believe that many Facebook users have been accessing its properties at meaningfully elevated levels over the last several weeks," Pachter wrote.
Still, Facebook has led the drop among top tech companies, plunging 30% in the past month, and the overwhelming momentum in the market is downward.
The rally on Thursday helped tech stocks erase some of the losses from the past month of declines, but the market has been unable to sustain multiple days of gains. The S&P 500 hasn't risen on consecutive days since a three-day gain ended Feb. 12.