Tech bloodletting nears $300B since Facebook stock crash
The rush to get out of U.S. tech stocks entered its third day Monday as concerns mounted over how the storied FAANG bloc will fare amid rising interest rates and slower growth.
All of the FAANGS retreated, with Facebook Inc. sinking 3.3 per cent and Netflix Inc. falling as much as 5.3 per cent. The FANG index retreated 2.5 per cent, widening its three-day loss to nine per cent. This compares with a 1.4-per-cent loss for the S&P 500 over the same time.
Investors have been bailing since Facebook’s earnings hit July 25, prompting the biggest market-cap decline in U.S. history. The group of tech megacaps has seen investors heading for exits with the advance seen as having gone too far, too fast.
“Sentiment is turning sour in FANG, especially after earnings,” Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co, said in an email. “They are dragging the Nasdaq 100 down by its feet.”
The sell-off has widened losses in the S&P 500 Information Technology Index to 5.2 per cent, the biggest three-day retreat since March. The rout erased US$240 billion from the market capitalization of the S&P 500 Information Technology Index to US$6.3 trillion, from US$6.6 trillion before Facebook reported a miss on its user growth.
Sentiment has soured since Wednesday, when Facebook reported tepid second-quarter user growth that dragged the stock to 19 per cent. To Bank of America’s Michael Hartnett, it signalled a peak in tech megacaps so he recommended clients short the FAANG block.
The S&P 500 Information Technology Index fell below its 50-day moving average on Monday, while the Nasdaq Composite Index and the Nasdaq 100 Index hover near that level.