INSUBCONTINENT EXCLUSIVE:
By Elena Popina and Lu WangRarely does a day go by in the US stock market without someone decrying its addiction to gains in the FANG bloc
of tech megacaps.
Now, in the middle of earnings season, their support has gone missing, and the result has been something less than a
catastrophe.
Not that it was a banner week
The SP 500 Index ended where it started, and the Nasdaq 100 -- home of Facebook Inc., Amazon.com, Netflix Inc
and Google parent Alphabet Inc
But with trade tweets popping off all over the place and a currency war brewing, anything short of a rout could be claimed as a victory by
the bulls.
For the five sessions, the SP 500 rose less than a point to 2,801.83
The Dow Jones Industrial Average added 39 points to 25,058.12
The Nasdaq 100 lost 0.4 per cent to 7,350.23
Indexes of small caps climbed, and the Cboe Volatility Index ended below 15 for a third consecutive week.
By far the biggest blowup of the
earnings season has come from FANG constituent Netflix, a hit that tech investors never quite got over
With Alphabet, Facebook and Amazon all due to report next week, concern is growing that hopes for group may have finally outstripped what
said Chad Morganlander, portfolio manager at Washington Crossing Advisors
There is concern about peak earnings, there is concern about what the trade war will do to the index of high-growth, high-multiple
Alphabet slipped after Google received a record $5 billion fine in Europe
All told, the bloc retreated 2.1 per cent
and the broader index intact.
Despite that, most investors were willing to see the glass as half full and celebrate a market where measures
of breadth are improving and no single company seems capable of spoiling the party
While they slipped over the five days, both the Nasdaq 100 and and an equal-weight version of the index, one that strips out
market-capitalization biases and gives the same influence to Apple Inc
as Ulta Beauty Inc., touched all time highs.
Obviously, FANG weakness may prove nothing more than a breather after they rallied at three
times the pace of the broader tech index this year
Hellwig, senior vice president at BBT Wealth Management
second quarter, 4 times the growth rate of the SP 500, data compiled by Bloomberg show
An index tracking Facebook, Amazon, Netflix and Alphabet is up 42 per cent this year, compared with a 4.8 per cent gain in the SP.
But the
seemingly invincible rally has pushed the stocks to some of their highest valuations on record
2012.
Twelve of the 71 tech firms in the SP have released results, with each reporting earnings that exceeded expectations
The 35 per cent profit growth tech companies have posted on average so far is the fourth-highest in the SP after energy, materials and
consumer-discretionary stocks
Every tech firm but two came in with better-than-expected top-line growth.
But that has done little to impress investors, at least so far
Tech stocks have dropped 2.7 per cent on average the day after reporting, the most among main SP sectors.
Concern about the high-growth,
high-multiple industry are widespread
Chris Senyek, chief investment strategist at Wolfe Research, urged investors to exit Facebook, Apple, Amazon, Netflix and Alphabet amid
wrote in a note this week
