Fed's looming rate hike adds more pressure on Cybersecurity ETFs

Investors continue to walk out of the high-growth tech shares on the Fed's intention to hike interest rates in March as inflation creeps in. The tech-heavy Nasdaq 100 fell by -11.43% this month, more than it did in the famed pandemic crash of March 2020 (-7.66%).

Among the gushing bleeders are Cybersecurity stocks like CrowdStrike, Zscaler, Okta, and Cloudflare, which have fallen by more than 20% over the past couple of months. Investors have taken out more than $135 million from Cybersecurity ETFs in January this year after losing double-digits percentage points on average.

Despite the bloodbath, the outlook for cybersecurity remains strong as nations and corporations are working to fend off a growing number of cyberattacks. In the U.S, $1.9 billion of Cyber funds were approved as part of a $1.2 trillion infrastructure package, with $1 billion devoted to creating a new grant program to improve the cybersecurity of state, local, and territorial governments. Meanwhile, tech research and advisory firm Gartner estimates that global spending on information security and risk management will total $172 billion in 2022, up from $155 billion in 2021 and $137 billion the year before.

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