Why Are Tech Stocks Plunging? The Risk of a U.S. "Hard Landing" Should Not Be Overlooked

The yield curve has been inverted for two years, and the Sahm Rule, which predicts recessions based on unemployment rates, is on alert. Citi suggests the U.S. economy is at a turning point; if the labor market continues to weaken, it may trigger a recession.

Tech stocks fell while defensive stocks rose, similar to the scenario during the 2000 tech bubble burst. At that time, tech stocks went through a significant rotation, and defensive sector stocks rose 35-45% from March to year-end 2000. The market value of tech and telecom companies fell by about 85% and 75% respectively from their peaks by the end of 2002.