Changing of the guard may be underway

The recent plunge in popular tech stocks such as Facebook could be signaling a changing of the guard is underway in the U.S. stock market.

Ever since high-flying tech stocks such as Facebook – which last week suffered the biggest one-day market value loss of any stock in American history – and Twitter – which on Friday tanked 20 percent – began to falter, there has been growing talk on Wall Street that the run of so-called “growth” stocks as market leaders may be nearing an end.

“The leaders have started lagging,” says Katie Nixon, chief investment officer at Northern Trust Wealth Management.

The recent tech wreck (which paused Tuesday when the Nasdaq rebounded nearly 0.6 percent) has traders wondering “if it’s a signal of a rotation out of tech into other trading opportunities” or if it’s a broader indicator of a marketwide downtrend, says Christopher Larkin, a senior vice president of trading product at discount brokerage E-Trade.

For now, Wall Street pros say investors are more inclined to move some money out of big tech winners and shift it into stocks that have not been performing as well, namely so-called “value” stocks, or those that sell at lower prices relative to things such as earnings or sales.

Cash has begun to flow into parts of the market deemed as offering more value, such as financials and food, drug and beverage stocks. These value stocks are just now beginning to perform better than growth stocks, reversing a twoyear trend.