The Nasdaq index is the biggest technology index in the world. The index is made up of the biggest technology companies in the world like Google, Facebook, and Amazon. These are some of the most valuable brands in the world used by billions of people around the world. The companies have moved to dominate the industries they operate in. For example, Google has the biggest market share in search while Amazon is the biggest e-commerce platform in the world. Facebook is the most powerful social media company in the world.
The growth of these companies has been applauded by many. However, they have been criticized by many people because of the power they have. For example, in the European Union, Google has been fined billions of dollars because of favoring its products against those of the smaller rivals. In the US, many small sellers in Amazon have complained against being discriminated. In Europe and in the US, Google, Twitter, and Facebook have been criticized for being biased against conservatives.
This could change as US regulators move to investigate the practices of these companies. Over the weekend, the DOJ and FTC made an agreement that paves way for antitrust investigations. This led to a sharp decline of the stocks, which wiped more than $133 billion from the market value. The House judiciary committee too said that it would launch an investigation of competition in the digital markets. In a statement, David Ciciline said:
The growth of monopoly power across our economy is one of the most pressing economic and political challenges we face today. Market power in digital markets presents a whole new set of dangers.
In the negotiations, the DoJ won the jurisdiction for investigating Google and Apple while the Federal Trade Commission (FTC) was granted purview to investigating antitrust issues at Facebook and Amazon. In response the stock prices of Facebook, Amazon, and Apple declined by 7.5%, 4.6%, and 1% respectively.
As the US politicians continue to campaign, the issue of the power of tech companies has made headlines. Democrat, Elizabeth Warren has said that as president, she would break tech companies like Amazon that offer a marketplace. Republicans have also complained about online censorship of conservatives.
The Nasdaq index declined to the correction territory after the announcement. The index declined to a low of below $7000. This is after reaching a YTD high of $7876 in May. On the yearly chart below, this price is below the 50-day and 25-day moving averages. The RSI has moved to the oversold level while the MACD indicator has continued to decline. As the trade war continues, and as the technology companies start being investigated, the index could continue to drop.