Technology stocks were in relief-rally mode last week and drove the markets higher. However, concerns about the Fed's decision to increase interest rates, high inflation, and the discovery of the COVID-19 omicron variant could end the tech stock party next year. Therefore, we believe investors should be cautious about betting on popular tech stocks DocuSign (NASDAQ:DOCU) and Asana (ASAN), which have both lost more than 45% in price over the past month. Let’s discuss.Although the tech stocks led the markets higher last week, inflation could end tech stocks' rally next year. The tech-heavy Nasdaq composite dipped after a three-day winning streak and ended the regular trading session lower yesterday. Even mega-cap tech shares caused U.S. stocks to tumble last week due to investor concerns over the COVID-19 omicron variant.
Furthermore, the Fed is expected to consider speeding up the pace of its tapering to $30 billion per month at its December meeting. This might give the Fed the flexibility to raise interest rates soon, which in turn could increase the interest expense borne by tech companies, reducing their future earnings.
Given this backdrop, we think investors should take care regarding betting on popular tech stocks DocuSign, Inc. (DOCU) and Asana, Inc. (ASAN), which have plunged more than 45% in price over the past month.