SINGAPORE: Investors got a scare recently when tech stocks on Wall Street tumbled sharply.
Over a period of about three weeks starting from Sep 2, the benchmark NASDAQ Composite index fell by about 11 per cent, leading many to wonder if the party is over for tech stocks and if they are poised for more downside.
Advertisement Advertisement
The big tech titans led the recent declines. Apple fell 18 per cent while Microsoft and Alphabet slipped 12 per cent and 16 per cent respectively.
Recent tech darlings like Salesforce.com fell 13 per cent while Tesla dropped about 33 per cent initially before staging a 29 per cent rebound to regain much lost ground.
REMINDER NOT TO BE COMPLACENT
The tech sell-off is a good reminder to investors not be complacent.
Advertisement Advertisement
The S&P 500 index had surged to new highs before the recent correction but these gains were driven by a narrow base of stocks, namely the mega-cap tech giants – Facebook, Apple, Amazon, Alphabet and Microsoft – which account for almost 25 per cent of the index based on market capitalisation.
READ: Commentary: Why is Alibaba planning to pour S$3 billion into Grab?
Other growth stocks have joined the party, including Salesforce.com, Tesla Inc and other predominantly tech companies leveraged to secular growth trends, not influenced by short-term cyclical or seasonal factors, like cloud computing, 5G and the like.
TECH SELL-OFF NOT TOTALLY UNEXPECTED
The tech sell-off was not totally unexpected, especially on the heels of a massive rally in August. Despite economic, political and earnings uncertainties, the S&P 500 index soared further, driven by strong investor sentiment.
FILE PHOTO: A 3D printe ..
Support the originator by clicking the read the rest link below.
