‘Tech wreck’ gives life to market’s forgotten stocks

Wall Street’s 8-year-old bull market has sent a message to Facebook, Apple and the rest of the mega-popular tech FAANG stocks: I can get along without you.

When the “tech wreck” hit on June 9, investment pros wondered whether the falling prices of the mightiest stocks on Wall Street would bring down the entire market.

If increasingly expensive superstars like Facebook, Apple, Amazon, Netflix and Google-parent Alphabet — the FAANG companies that had been generating big gains in 2017 — weren’t working anymore, wouldn’t that spell trouble for a market that had grown overly reliant on them?

Those fears have proved unfounded. The Dow Jones industrial average has notched five record highs in the seven trading sessions since tech took its big hit, including another record on Monday, a day that also saw the tech sector rebound 1.7%, its biggest one-day gain since December. The broader Standard & Poor’s 500 stock index also climbed back into record territory. This despite a nearly 4% decline for tech over the six trading days heading into this week.

“It’s a clear sign that we are not in an all or nothing market,” said Andrew Adams, a market strategist at St. Petersburg, Fla.-based investment firm Raymond James.

The bull, it turns out, is more resilient than expected. And it may be even healthier following the tech selloff, Wall Street pros say.

Instead of getting out of stocks, many investors sold tech shares and redirected their cash to other parts of the market, a tactic known as “market rotation.” The cash flowing to stocks that had been largely ignored allows them to gain strength and move higher.

“The rotation part is key, that is how bull markets keep going,” said Todd Sohn, a technical analyst at Strategas Research Partners, a Wall Street research firm.