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Published: May 31, 2022 9 min read

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Vintage photo-illustration of a a man looking at a negative stock market chart
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Technology stocks like Amazon and Netflix had a stellar run during the pandemic, pumped up by stimulus money and higher demand driven by lockdowns. But 2022 so far has not been good to the tech sector.

The tech-heavy Nasdaq Composite is down around 23% for the year so far, after soaring 21% in 2021. For the sake of comparison, the S&P 500 — an index made up of 500 of the largest U.S. companies from a wide variety of sectors — has fallen 13% this year.

Even after stocks overall bounced back last week, technology giants like Netflix and Meta are down around 67% and 42% for the year, respectively, while popular "at-home" tech companies like Zoom and Peloton are down around 40% and 59%. Even shares of Apple and Google's parent company Alphabet have fallen more than 20% so far in 2022.

Tech "took it on the chin," says Liz Young, head of investment strategy at the digital personal finance company SoFi. "And it may continue to take it on the chin because we don't seem to be coming out of this environment anytime soon."

Here's why technology stocks have been pummeled amid the broader stock market selloff in recent weeks.

Fed interest rate hikes

During the pandemic, the U.S. central bank kept interest rates near zero and stimulated financial markets via quantitative easing — a policy which entails the Federal Reserve buying financial assets to boost economic activity.

We watched as the stock market hit record high after record high, and investors cheered as they made money with relative ease by investing in riskier assets like tech stocks, and even meme stocks and cryptocurrency.