Anxiety over another round of interest rate hikes has stoked fears and sparked a sell-off in high-flying tech stocks which have led the strongest performance in US indexes in recent months.
The 7 biggest stocks in US markets are $100 billion shy of losing $1 trillion in market capitalization.
Inflation is also making child-care costs go up, and changing the younger generation’s view of weddings.
Tipping has a long history in the U.S., but a recent survey shows that more Americans have a negative view of tipping as many feel they are being pressured to tip, especially from digital payment platforms.
Here is a rundown of the financial news that made headlines in the past week.
7 Biggest Tech Stocks Lose $900 Billion in 3 Weeks
The ‘magnificent seven’ have lost more than $900bn in 3 consecutive weeks. Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla have seen their share prices fall in recent weeks, some as much as 10%.
Boosted by a better-than-expected financial performance from the likes of Meta, Nvidia, and Amazon, coupled with the rising wave of AI enthusiasm, the 7 mega-capped tech stocks led the strongest performances in the US stock market for some weeks.
However, in the last 3 weeks, the group has posted its worst run of combined market capitalization decline this year.
Fresh US economic data which has erased hopes that the Federal Reserve would ease off on interest rates. This, plus growing anxiety at the possibility of a recession has dampened investor sentiment on tech stocks in recent weeks.
WeWork Plans 1-for-40 Stock Split
In an effort to maintain its listing on the New York Stock Exchange, WeWork Inc. is proceeding with a 1-for-40 reverse stock split.
The reverse stock split will become effective on September 1 at 4:01 p.m. (New York time) and shares will commence trading on a post-split basis on September 5 at market open.
The company stated in a statement that the separation will be performed to regain compliance with listing requirements and is not expected to affect operations.
WeWork’s rapid decline has been astounding. Once the largest private occupier of office space in Manhattan and London in 2019, it operated millions of square feet in dozens of countries, and was valued at $47 billion, making it one of the most valuable enterprises in the United States.
However, since going public in October 2021, WeWork’s stock has dropped 99%, wiping out $9 billion in market value.
Bitcoin Tumbles on Interest Rate Speculation, SpaceX and Tesla Sell-off
The expectation of higher interest rates for a prolonged period of time and Tesla and Space X’s liquidation of Bitcoin assets triggered a selloff in risk assets such as Bitcoin, resulting in massive liquidations of bullish bets.
The price of Bitcoin decreased from approximately $28,600 to $27,600 following the release of the Federal Reserve’s July policy meeting minutes. Additionally, a robust dollar and risk-averse trading weighed on cryptocurrencies.
Thereafter, the flagship cryptocurrency slumped to a two-month low of $25,392.05 after the Wall Street Journal reported that Tesla and Space X had written down their Bitcoin holdings.
Tesla sold approximately 75% of its Bitcoin holdings in 2022, after having invested $1.5 billion in the leading cryptocurrency. After writing down $373 million, SpaceX also sold off its Bitcoin holdings.
Childcare Inflation is Slowly on the Rise
While inflation as a whole has declined substantially since last year, one of the largest expenses for families with young children, child care, has continued to rise sharply.
Parents’ childcare expenses may increase this fall as providers raise fees to offset rising costs and the federal government suspends pandemic aid.
The Labor Department recently reported that the national average price of creche and preschool services increased by 6% in July compared to the previous year. This was nearly double the overall inflation rate of 3.2%, which had declined since its recent peak of 9.1% in June of last year.
The cost of child care has risen as more companies mandate employees to return to the workplace. This is also coupled with increased pay for low-wage workers due to labor shortages.
Other associated costs such as escalating costs for food, instructional materials, utilities, and other expenses, inflation is also driving up the price of health care. The expiration of the $24 billion Child Care Stabilization Program is also putting pressure on childcare costs.
The federal financial aid program created in 2021 to help providers pay their expenses and remain open during the pandemic will be ending on September 30, 2023, thereby putting many families at risk as many parents will be forced to pay more for child care.
Gen Zs and Millennials Say It’s Too Expensive to Get Married
A study by the Thriving Centre of Psychology has found that 75% of Gen Z and millennial couples think it’s too expensive to get married right now. In June, 906 single Gen Z and millennial pairs were surveyed by the center.
High inflation made the average wedding cost $30,000. That’s $2,000 more than in 2021. But even though wedding prices are going up, 66% of people think it will be worth it, according to a separate study carried out by The Knot.
Traditions about weddings are also changing among younger couples. Many are now open to the idea of having smaller, more intimate weddings that they can pay for themselves.
More Americans Have a Negative View of Tipping
According to a recent report by Bankrate, two-thirds of Americans have a negative view of gratuity, especially when it comes to the contactless and digital payment prompts that have sprung up since the Covid pandemic.
Consumers now have more opportunities to tip for a broader variety of services than ever before. Many consumers believe that the pressure to tip has increased over the past year. This has given rise to a trend known as “tip fatigue” as consumers are now resenting gratuity reminders even more and tipping less.
According to Toast’s most recent restaurant trends report, gratuity at full-service restaurants has remained stable, while tipping at quick-service restaurants has dropped to a five-year low of 16.7% at the beginning of 2023.