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Technology companies, which for much of the pandemic have been the stock market’s best performers as they have benefited from and enabled remote work, social distancing and online shopping, are nearing a bear market.

Half the stocks that make up the Nasdaq 100, an index closely aligned with the largest technology companies, have dropped more than 20% from their 52-week highs. The term of art for that on Wall Street is a bear market, signaling a marked shift in sentiment among investors and a decline even more severe than the 10% drop known as a correction. Some shares have faired considerably worse.

The worst performer in the index is Peloton, whose exercise bikes have become a status symbol and seemed like must-have items at the start of the pandemic. The company’s stock has plunged 82% over the past year despite a gain of nearly 10% Monday. At nearly $30, the share price is back to its pre-pandemic level and just above the $29 of the stock’s initial public offering in September 2019.

Peloton is considering layoffs, and last week it announced that it lost $270 million in the last three months of 2021, compared with a $64 million profit a year earlier. The company had been planning to open a new U.S. factory this year, but now it appears to be scaling back production to work through its inventory of unsold bikes and treadmills.

“Peloton is the extreme example of a company where people extrapolated that COVID growth into the future and were way off,” said Ryan Jacob, portfolio manager of the Jacob Internet Fund.

Four of the Nasdaq’s five worst performers of the past few months are former pandemic stars: Peloton, Moderna, Zoom and DocuSign, which allows users to sign legal documents remotely.

Shares of Moderna, the vaccine maker, hit a high of nearly $500 in August but are down 69% since then, falling even as omicron case counts have surged. Zoom is off 66% now that some workers have returned to the office and competition from Google and Microsoft has intensified.

Taken together, technology stocks are still clear of bear market territory, though they got within a percentage point Monday before the market recovered somewhat. The Nasdaq composite index, which is broader than the Nasdaq 100 but is still heavily influenced by the moves of tech stocks, has dropped nearly 14% since hitting a high in November.

Other tech companies with shares that are well into a bear market include PayPal, Chinese e-commerce giant Baidu, biotech firm Biogen and dating app maker Match Group.

Observers say one of the biggest drivers of the drop in tech stocks has been bond yields, which have been rising lately, making risky investments like tech stocks less appealing. And David Mericle, a Goldman Sachs economist, told clients in a note over the weekend to expect the Federal Reserve to tighten the supply of money “at every meeting until the inflation picture changes.”

Tech stocks, especially companies that are not yet profitable, tend to be particularly sensitive to increases in interest rates, which typically signal an expectation of higher inflation, lowering the value of future earnings.

“The return to normalization that we will see this year will include more moderate growth and higher interest rates,” said Jacob of the Jacob Internet Fund. “That’s a difficult environment for large-cap tech.”

But the latest concern among investors is that the profits of even the largest tech companies may be faltering. Shares of Netflix dropped as much as 10% after the company warned that its subscriber growth rate would slow sharply in 2022. Microsoft is expected to report Tuesday that its profits in the final three months of last year rose 12% from a year earlier, less than half the increase in the prior quarter. In all, tech company bottom lines are expected to have risen nearly 15% in the fourth quarter, down from full-year growth of nearly 28%.

“A hawkish Fed is seen as the main culprit of tech sell-off, but fundamentals for growth stocks have also weakened,” Savita Subramanian, a strategist at Bank of America, wrote in a note to clients Monday.

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