The sell off in Wall Street tech stocks continued Monday, although the fall wasn’t as dramatic as Friday’s 1.8% side in the Nasdaq.
After being down 2.6% in early trading Monday, the Nasdaq rebounded to be down half a per cent at the close. The solid recovery in afternoon trading gave some analysts confidence the two day slide is a passing thing, but others are not so sure.
The Dow and the S&P 500 also fell, while the overnight futures market on the ASX 200 saw a drop of around 20 points.
The S&P 500 finished down 2.38 points, or 0.1%, at 2,429.39, the Dow ended three days of gains to close down 36.30 points, or 0.2%, at 21,235.67.
The Nasdaq, which hit an all time high on Friday morning, before the 1.8% slide started around 12.30pm that day, lost another 0.52% overnight Monday to end at 6,175.46.
By the close of Monday’s session, the Nasdaq had suffered its worst two-session slide since last September, raising questions about what triggered the sudden selloff in tech stocks last Friday, snapping (for the time being?) Wall Street’s record bull run in recent months.
The selloff began on Friday, where Apple and tech chip group, Nvidia Corp (2016’s best stock performer in the S&P 500 index on a percentage basis), and a group of tech giants like Amazon, Facebook, Alphabet and Netflix fell sharply on Friday and continued their unraveling on Monday.
The index combined 2.3% decline in the past two sessions, is Nasdaq’s worst two-day skid since it fell 2.99%, on September 8 and 9 according to marketwatch.com.
What has sparked the so-called mini-tech wreck isn’t exactly clear, but the falls have clearly hit investors who are wondering if it is a short-term correction—defined as a 10% pullback in an asset from a recent peak —or something more fundamental for the group of highflier stocks (notably so-called FAANG stocks, – Facebook, Amazon, Apple, Netflix and Google-parent Alphabet) – with valuations coming back to earth.
Tech stocks have surged since President Donald Trump’s inauguration in January, with the technology sector of the S&P 500 up nearly 14% in value and according to Reuters, at its most expensive since early 2008 in terms of price to earnings expectations.
In fact big tech stocks – particularly the FAANG shares plus Microsoft took over the market leadership from financials and other sectors that outperformed after the November 8 presidential election on hopes that Trump’s agenda of deregulation and tax cuts would benefit the sector.
The five largest US companies by market capitalisation, Apple, Alphabet, Microsoft, Amazon and Facebook added more than $US600 billion in market value so far in 2017 before the sell-off started last Friday.
At the close Apple ended the day down 2.3% after shedding as much as 4.3 per cent of its value this morning. That took Apple’s two day fall to more than 5% as several brokers have changed their recommendations on the stock.
Netflix closed down 3.9%, compared to an earlier loss of 6.2% which took it into correction territory (a fall of 10% or more a recent peak) after Friday’s fall.
Alphabet (Google) lost 0.9%, compared to a 3.4% fall in the morning session, Facebook ended down 0.8% after a 3.4% slump, Amazon shares shed 1.4%, from an earlier 3.4% slump and Microsoft ended 0.8% lower after an earlier 3.1% drop
Meanwhile on Comex, August gold fell $2.50, or 0.2%, at $US1,268.90 an ounce for its fourth-straight drop, the longest string of losses since the nine-session period ended March 10, according to FactSet. July silve shed 27.9 cents, or 1.6%, to $US16.944 an ounce, while July copper lost 3.4 cents, or 1.3%, to $US2.616 a pound.
Gold lost 0.7% last week, its first weekly fall in five weeks. Silver fell a larger 1.7% and copper was down nearly 3%.
