Here are 3 reasons why stocks are tanking Stocks were pummeled on Friday with the Nasdaq slumping more than 4% to post its worst month since 2008. Why things have gotten so bad in Wall Street.

Here are 3 reasons why stocks are tanking

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SCOTT SIMON, HOST:

A miserable month for stock markets has just ended, with tech companies taking a huge hit. They raked in enormous profits during the pandemic. But the world and consumer habits seem to be changing again. The steep uncertainty has led the Nasdaq to have its worst month since March of 2008, during the subprime mortgage crisis. The Great Recession was kicking in. Here to explain what's going on in the markets is NPR's David Gura.

David, thanks so much for being with us.

DAVID GURA, BYLINE: You got it, Scott.

SIMON: Boy, Big Tech usually rides so high. Why are things so bad right now?

GURA: Yeah. Three years into the COVID-19 pandemic, huge cultural and economic shifts are underway that are affecting tech companies in particular. I'm talking about Netflix and Amazon and Zoom. It wasn't all that long ago we were stuck at home bingeing on shows because we couldn't go out, shopping online because we couldn't go to stores. And Big Tech benefited from all that activity. Companies posted record earnings. But now we're in this transition where workers are returning to their offices.

There is a surge of interest in traveling again. Restaurants are filling up. And that's changing the outlook for tech. Just to drive this home, you know, this was a big week for earnings. And Netflix really shocked investors when the company announced it lost subscribers in the first three months of the year. It's the first time that's happened in more than a decade. And the company's share price has fallen by about 45%.

Amazon just had a losing quarter, in part because people are shopping in stores again. And the reason this matters is tech is a huge part of the market. It accounts for almost a third of the S&P 500, that big benchmark, which means if you're invested in an index fund, you're affected by this. You've got these trends going in the wrong direction, Scott. And then on top of that, there is inflation and rising interest rates, and that's putting pressure on these companies and on the rest of the market.

SIMON: David, how is it that inflation and higher rates affect tech companies?

GURA: Well, you know, with inflation, your salary is not worth as much. And inflation has the same effect on a company's future earnings. Higher rates are also traditionally a drag on tech companies because they have to borrow to grow. And compounding Wall Street's worry about inflation is growing concern about how effective the Fed Reserve is going to be dealing with it.

Fed Chair Jerome Powell has signaled that because inflation remains at a 40-year high, he and his colleagues are preparing a more aggressive response for when the Fed meets next week. But investors are worried the Fed could be too aggressive. It could inadvertently tip the economy into a recession. Now, a recession isn't seen as likely in the near term, but it is seen as a real risk. And that, in and of itself, as you can imagine, is unsettling to investors.

SIMON: And, of course, it's happening around the world. How is that affecting Wall Street so far?

GURA: Yeah. Some of these Big Tech companies continue to be hard-hit by supply chain issues. In China, there's been an uptick in COVID cases, and the government has responded very forcefully to that. There's been a lockdown in Shanghai for five weeks now. Ports are closed. Factories are closed.

Apple CEO Tim Cook mentioned this on a call with Wall Street analysts.

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TIM COOK: I want to acknowledge the challenges we are seeing, from supply chain disruptions driven by both COVID and silicon shortages to the devastation from the war in Ukraine. We are not immune to these challenges.

GURA: Apple worries China's crackdown will reduce how many iPhones and iPads it'll be able to sell in the coming months. Other companies said on their earnings calls they also anticipate more delays and manufacturing slowdowns. Now, Tim Cook mentioned the war in Ukraine. That's another hot spot Wall Street is watching very closely. Russia's invasion continues to put pressure on commodity prices globally. Since late February, Brent Crude, the international oil benchmark, has traded above $100 a barrel. And before the war, it was trading in the $70 to $80 range.

But this goes beyond just energy prices, Scott. It's affecting food supplies, including wheat - also leading to higher costs for metals, like aluminum and palladium, making it more costly for companies. And economists - well, they expect that's going to continue to be the case.

SIMON: NPR's David Gura - thanks so much.

GURA: Thanks, Scott.

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