Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Indexes  >  USA  >  S&P 500    SP500

S&P 500

(SP500)
SummaryQuotesChartsNewsHeatmapComponents 
SummaryMost relevantAll NewsOther languagesNews of the index componentsMarketScreener Strategies

Is the party over for tech stocks?

02/23/2021 | 09:16am EST

Futures on the Nasdaq are down by almost 2 percent today, following yesterday’s drop. This comes after the Nasdaq and the benchmark S&P 500 posted their biggest one-day percentage declines in February on Monday as inflation fears and overheating in asset markets hit the so called "stay-at-home" winner stocks that had led the Wall Street rally from the pandemic lows.

Whether we call this "reflation trade", "rotation" or "arbitrage", financial markets are shaking up around investment flows that are in the process of being reoriented. Will this continue? That is the question. The economic and health context undeniably gives the proponents of a new deal more arguments than they had a few weeks and a fortiori a few months ago.

The beginning of the disgrace of technology stocks was very visible yesterday in the United States: the Nasdaq lost 2.63% while the Dow Jones grabbed 0.09% at closing. This is not the first attempt at rotation in the last year. The previous ones had finally failed after a few sessions in the form of a firework display for cyclical stocks. This time, the macroeconomic context is different. Vaccination is beginning to prove its effectiveness. The sharp decline in technological values of the previous day occurred, not entirely coincidentally, when the United Kingdom unveiled data showing that the vaccines most used across the Channel significantly reduce hospitalizations. But we all know that the main political marker of the pandemic is the ability of healthcare systems to accommodate patients.

If all goes according to plan, economic growth will return to record levels. First, because the basis of comparison will be very weak in the spring. Second, because businesses will gain confidence. And finally because certain sectors that have reached a break-even point will start to generate business again. It's almost mechanical. In this context, investors are logically looking at stocks that will benefit from this economic pull, the so-called cyclical stocks. They are also looking at highly discounted stocks, which are collateral beneficiaries of the situation.

Why are technology stocks falling in the current context? Well, these companies are growth companies, which are valued on the promise of ever-increasing profits over the long term. If other short-term opportunities emerge, they necessarily lose their appeal. And there was a "TINA" effect ("there is no alternative") that has made technological values a must. Despite questions about asset rotation that emerged at the end of the summer, investment in technology stocks remained the most bottled-up bet among managers at the beginning of 2021, because it remained reassuring and rewarding. However, new opportunities have emerged.

This consensus on the technology sector has also created a monster: the two most watched indices in the world, the S&P500 and the Nasdaq, are dominated by technology stocks (the same ones, moreover). This can create a downward bias in all markets, while only a handful of stocks, the largest, find themselves oversold after being overbought. This will have to be monitored in the days to come, especially since the current situation resonates with the theories according to which the financial market as a whole is not in a speculative bubble situation, but that it harbors pockets of exuberance that are difficult to justify.

January UK employment figures, the Conference Board's Consumer Confidence Index and the Richmond Fed's Manufacturing Index are due today. Jerome Powell is scheduled to address parliamentarians this afternoon.


© MarketScreener.com 2021
Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL 1.97% 32118.78 Delayed Quote.2.91%
NASDAQ 100 -0.79% 12538.96908 Delayed Quote.-1.71%
NASDAQ COMP. -0.73% 12829.380811 Delayed Quote.0.25%
S&P 500 0.79% 3873.41 Delayed Quote.2.29%
All news about S&P 500
01:34pStocks Mixed Midday as Highest Level of Bond Yields Since January 2020 Pressu..
MT
01:23pMIDDAY REPORT : US Stocks Mixed as Highest Level of Bond Yields Since January 20..
MT
12:59pDow on Course for Record While Tech Trade Stumbles
DJ
12:22pWALL STREET STOCK EXCHANGE : S&P 500, Dow advance as stimulus bill gets Senate n..
RE
12:13pUS Stocks Mixed as Highest Level of Bond Yields Since January 2020 Piles Pres..
MT
11:33aGlobal stocks climb as yields pull back from earlier high
RE
11:15aStocks climb as yields pull back from earlier high
RE
10:52aWall St rises as tech selloff eases; U.S. Senate passes stimulus bill
RE
10:17aNasdaq Slips as Bond Yields Rise
DJ
10:11aUS ECONOMICS : January Wholesale Inventories Unrevised From Advance Estimate, Sa..
MT
More news
Chart S&P 500
Duration : Period :
S&P 500 Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends S&P 500
Short TermMid-TermLong Term
TrendsBearishBullishBullish
Top / Flop S&P 500
HANESBRANDS INC. 21.125 Real-time Estimate Quote.9.97%
VIACOMCBS INC. 79.625 Real-time Estimate Quote.7.25%
CF INDUSTRIES HOLDINGS, INC. 50.34 Delayed Quote.6.83%
ROSS STORES, INC. 120.205 Real-time Estimate Quote.6.25%
UNITED CONTINENTAL HOLDINGS, INC. 53.67 Real-time Estimate Quote.6.24%
APPLIED MATERIALS, INC. 107.45 Real-time Estimate Quote.-5.29%
ALIGN TECHNOLOGY, INC. 507.785 Real-time Estimate Quote.-5.35%
MARATHON OIL CORPORATION 12.245 Real-time Estimate Quote.-5.66%
TERADYNE, INC. 107.29 Real-time Estimate Quote.-5.80%
LAM RESEARCH CORPORATION 515.53 Real-time Estimate Quote.-5.87%
Heatmap :