Investor worries about the continued bull run in tech stock sloughed off shares for the second day, extending losses from last Friday. US indices were pulled lower, the Dow by -0.17%, the S&P 500 dropped -0.10% and Nasdaq made a late day recovery to close -0.52%.
Globally, investors seemed to be letting the steam out with a long over-due correction according to market commentators.
The sell off meant a dramatic slide for the sector sending indices in Asia lower with the Hang Sen Index down -1.24% and Nikkei -0.52%. Technology players Samsung (1.27%) and Tencent (-2.45%) were among the decliners in the region.
- Dow 21,325.67 -0.17%
- S&P 500 2,429.39 -0.10%
- NASDAQ 6,175.70 -0.52%
- Russell 2000 1,419.21 -0.18%
- NYSE Composite 11,746.46 +0.01%
- Gold 1,267.80 -0.09%
- Oil WTI $46.09 +0.02%
- 10-year yield 2.211% +0.01%
The pound continued its slump trading against the dollar $1.27 and the Euro $1.12.
Oil enjoyed a rise after Saudia Arabia is said to be reducing oil exports to a number of Asian countries including the US according to Reuters. Deeper cuts in volumes of around 35% is expected for the US.
Energy stocks such as Chevron (+1.54%) and Exxon Mobil (+0.97%) rose. Output figures and U.S. shale crude production from OPEC and the International Energy Agency will be reported this week.
All FANG and no bite?
A similar scenario was played out in Europe with the CAC, FTSE and Dax all declining -0.47%, -0.21% and -0.18% respectively.
The so-called FANG or FAAMG stocks had reached stratospheric heights. Recently, Amazon briefly touched $1,000 share price. Nasdaq is heavily overweighted by the top 5 tech stocks which account for 55% of the index gain year to date.
Another member of the FAANG club, Netflix, summarily sank -4.17% to $151.44 on the S&P 500. Over the last week it has declined -8.25% and the last month has seen -1.73%.
Facebook (-0.78%), Amazon (-1.37%), Google's parent, Alphabet (-0.86%) and Microsoft (-0.77%) were also caught up in the sell-off.
Apple also declined -2.39%. Analysts say pockets of high valuation are seen but how elastic are those pockets?
Herd mentality may drive the tech sector currently but investors are being cautioned by analysts like Goldman Sachs to check revenue and earnings trends are in place and can support such high valuations (in the case of Amazon is at 170x).
GE's Immelt steps down, shares up
GE gained 3.58% to $28.94. Jeff Immelt, CEO and chairman, announced he was stepping down from his role after 16 years at the helm.
John Flannery, former president of the health care business will take on the role of CEO effective in August 2017. Immelt will remain chairman until his retirement at the end of December 2017.
GE has ascribed successes and the company's transformation to Immelt's 'long-term strategic vision and willingness to disrupt GE' noting he 'has completed $260 billion of asset sales for GE Capital since 2015.'
GE had been under pressure from activits investor, Trian Fund Management to cut costs and boost profits. In response, Immelt embarked on a two-year cost savings target and altered GE's executive bonus programme.