Big-tech: boom in layoffs and factory closures, but the price rises on the stock exchange

The series of bad news from the big tech: it is the case of chain layoffs and the closure of factories and warehouses which are affecting many big tech. Simultaneously, the US technology stock index Nasdaq seems to have started a new bullish cycle. Could this be a trap for long traders?

Big-tech in difficulty: the stability of corporate margins at risk

In the eye of the storm is Amazon, which is showing clear signs of weakness. Following the news of last week’s large workforce cut, the company has faced other types of turmoil. Specifically Amazon plans to close this year three of its UK warehouses in an operation that will involve the dismissal of approximately 1,200 employees. The company is indeed facing a dramatic reduction of the online sales and there doesn’t seem to be any recovery.

The reasons are to be found in the modification of the shopping habits of consumers who, after having resumed their pre-pandemic customs, also have to face a difficult economic situation.

But the need to reduce the workforce is common to many big-tech companies: tech companies have eliminated a total of 154,000 jobs last year. It stands out among these Salesforce Inc., which has said it will cut about 10% of its workforce. And 2023 isn’t off to the best start: Industry tracker Layoffs.fyi estimates they’ll be fired 18,300 employees this year. However, the news was well received by the markets, confident that the reduction in staff costs could keep margins acceptable for investors.

Just consider the META title, whose title has ushered in a new growing trend since the communication of its intention to eliminate more than 11,000 jobs. But the equity rally could for many experts have short life: According to Mike Wilson, head US equity strategist for Morgan Stanley, the cuts they will not be enough keep company profits intact.

Will the Nasdaq100 index continue to rise?

Although the problems appear to have just begun, on the stock market, technology stocks have started a new growing trend. 2023 started less aggressive than expected and the Nasdaq has year-to-date register a positive performance of 5%. Even back there volatility on the main stocks of the technological list and on the social networks of the sector, many traders have rediscovered their enthusiasm for i long. The next target is that of 11,500where a is placed dynamic resistance identified by the decreasing trendline traceable from the absolute maximums of the index. Broken that level the next technical step is identified in the numerary of 12,000 points. Likewise a bullish signal it seems to come from the Heikin Ashi candles on a weekly timeframe: after a series of four red candles, the current one seems intent on closing the week on a positive note. It could therefore be the beginning of a new, albeit brief, uptrend for the sector.

Investors who are more fond of a fundamental approach to investing are more sales oriented: in fact, the latest news communicate anything but optimism and according to their point of view the next ones quarterly will significantly reduce the expectations of long traders.

Nasdaq100-Weekly
Weekly candlestick chart of the Nasdaq100 technology stock index