Tech bubble jitters send Wall St tumbling
WALL Street tumbled yesterday, with hundreds of billions of dollars wiped off the value of America’s booming tech sector amid worries of a Nineties-style bubble.
The tech-heavy Nasdaq dropped nearly 5pc as heavyweights such as Apple, Amazon, Microsoft and Facebook lost ground. The index has notched up a string of record highs in recent weeks.
Ann Berry, a partner at US private equity firm Cornell Capital, told Bloomberg TV the sell-off was the product of investors cycling out of tech stocks to even out their exposure to price falls. “What we are seeing is a little bit of profit-taking now in the big tech sector as people look to rebalance their portfolios going into the last part of this year,” she said.
Some analysts have warned of a bubble similar to the dotcom boom of the late Nineties and early 2000s, but consensus is far from clear.
Others have pointed to the stock market’s mighty bull run as testament to the effect of the massive economic stimulus unleashed by governments and central banks. David Miller, investment director at Quilter Cheviot, said investors were “behaving rationally” by piling into companies that had succeeded through the pandemic.
“Investors have allocated more money to companies that are thriving, with those able to survive close behind. On the other side of the coin, those companies with products or services that we no longer need or require are struggling for attention,” he added. “Many will not survive.”
CBOE’s Vix index – a measure of expected S&P 500 price shifts known as Wall Street’s “fear gauge” – has risen hand-in-hand with soaring equity valuations in recent weeks.