(Bloomberg) -- The initial rally in technology stocks after the Federal Reserve meeting proved to be short-lived with the shares of most megacap companies closing lower for the week.
Apple Inc. and Microsoft Corp., the largest by market value, were the two worst performers. Apple suffered a drop of 4.6%, its worst weekly decline since February. Microsoft fell 5.5%, the biggest weekly decline for the software maker since October 2020. Google-parent Alphabet Inc. sank 4.2%.
The volatility in the world's biggest technology stocks highlights concerns about the Fed's inflation-fighting shift and economic growth amid rising Covid-19 cases. A spike in interest rates could put pressure on stocks with higher valuations, especially if profit growth is shrinking.
Rising Megacap Sway Over S&P 500 Adds to Rate Angst: Tech Watch
Apple remains a big stock market winner after a rally over the past month. The stock is up 29% since the start of the year and is outperforming the S&P 500 and Nasdaq 100. Microsoft has gained 46% in 2021, creating more than $700 billion in market value.
Facebook parent Meta Platforms Inc. was the only gainer this week among the five biggest U.S. companies with an advance of 1.2%.
So far most of the damage in the tech sector has been confined to formerly high-flying stocks that tend to be less profitable and therefore more susceptible to pressure from higher interest rates that are used to value the present value of future cash flows. An exchange-traded fund that tracks software companies is down 13% from a November peak.
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