Tech companies, like Apple, have come about to exert a huge influence on the stock market. Apple, for instance, with its $500 billion market cap, is critical for NASDAQ. And this dependency may lead the stock markets, one day, to plummet if these tech entities go down.
Microsoft is another case in point, with its $228 billion. The problem is that the tech companies are far more volatile than other stock market entities. Apple’s stock, for instance, can rise instantly on the successful release of a device or plummet quietly due to a lack of user response.
Same goes for Microsoft. In fact, we witnessed this phenomenon very clearly when we saw Microsoft’s stock decline recently over the exit of its Windows chief. If such tiny incidents can exert such huge influences on a tech company’s market standing, they will inevitably also effect the stock market that hosts them.
Just consider this for a moment: if Apple continues its remarkable progress and in the near future, comes to own 10% or so of the NASDAQ, NASDAQ would be very dependent on Apple for its overall performance. So if Apple makes one little mistake which plummets its stock value, that would directly hit NASDAQ.
Now imagine more than one tech companies going down this way. That can take a significant toll on the stock market and even lead them straight to the bottom. However, there seems no way really for the stock market to guard itself against such risks.
Source: Oakshire Financial