Dotcom crash fears as Nasdaq suffers second day of falls

Fears of a new dotcom crash gained momentum on Friday, as America’s Nasdaq stock exchange continued declined sharply for the second day running.

The market, which is favoured by technology companies, fell more than 2pc in the first few minutes of trading in New York, extending Thursday’s losses, when it suffered its biggest fall in nearly two and a half years.

High-profile companies such as Facebook, Tesla and Netflix led the fall on Thursday, slumping more than 4pc as worried shareholders cashed out the technology sector. They continued to decline on Friday, although they were no longer leading the charge downwards.

Biotech companies and dotcom businesses listed on the New York stock exchange also suffered a tumble, with Twitter, the San Francisco social network, dropping more than 2pc in early morning trading.

The same set of companies have seen their values rocket over the past several months, as funds scrambled to invest in the technology sector, despite the fact that some of the firms do not even make any money.

The increases have sparked concerns that we could be caught in a new technology bubble, reminiscent of the one in 1999 that preceded the 2000 dotcom crash.

Analysts said there was a flight to safe stocks, and that the “highfliers” were getting badly hit.

“The market is very skittish,” David Pavan, a portfolio manager at ClariVest Asset Management, told Bloomberg. “Today is a very strong preference for cheap stocks. Higher growth stocks get really hit hard.”

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