Why Shares of Alibaba, Nio, and New Oriental Education & Technology Group Are Falling Today
Several prominent Chinese stocks trading on U.S. exchanges fell today along with the broader markets, especially as China continues to grapple with concerns related to COVID-19.
Shares of the e-commerce giant Alibaba (NYSE: BABA) traded nearly 6% down as of 1:38 p.m. ET today, shares of the electric vehicle maker Nio (NYSE: NIO) traded roughly 5% lower, and shares of the private tutoring company New Oriental Education & Technology Group (NYSE: EDU) had fallen 6%.
Most stocks struggled after the Federal Reserve's rate-setting committee yesterday hiked its benchmark overnight lending rate, the federal funds rate, by a whopping 75 basis points (0.75%), as the Fed ramps up its efforts to tame high inflation. Other central banks are also now moving to raise rates. Tech companies in general become less attractive as rates rise because higher rates reduce the present value of their future cash flows. Additionally, higher rates make safer assets like U.S. Treasury bills yield more.
Source Fool.com
