FAANG, FANG, FAAMG, OMG!… whatever your favorite tech acronym, it’s been a tough slog lately for the darlings of the stock market.
Since banging out a record high on June 8, the Nasdaq
is down almost 3%, hobbled by declines in juggernauts like Netflix
Is that the terrifying sound of the bubble popping?
Not if the Barron’s weekend cover story is to be believed. No, our call of day suggests this has merely been the pause that refreshes. A hiccup.
The reasoning? The sector’s earnings growth will continue to strengthen “as technology burrows into nearly every aspect of the economy, from consumer products to commercial and industrial applications.”
Specifically, Apple’s upcoming iPhone 8, Facebook’s
push toward two billion monthly active users and Amazon’s clear designs on conquering the world (more on that below) will all emerge as drivers in the next leg up for tech stocks.
“We might not like that these companies have gotten so big and so dominant, but they are reaching global audiences in ways that we’ve never seen any company do,” Dan Chung, CEO of asset manager Alger, told Barron’s.
And they’re still cheap. Relatively speaking.
The tech sector traded at 70.1 times trailing fourth-quarter earnings during its 2000 peak. Nowadays, that number is merely 23.9 times trailing earnings. Put that up against the 21.6 times multiple on the S&P
and it doesn’t seem so out of whack.
So up and away, right?
Key market gauges
Indeed, it is shaping up for a risk-on day. Futures on the Dow
and the S&P
are up, with the Nasdaq
looking at an even stronger open. Europe
closed higher. Gold
is off, while crude oil futures
Read the latest in Market Snapshot
prices have stabilized a bit since that big pullback last week. But the volatility probably won’t be gone long.
Obviously, the Amazon/Whole Foods
buzz will likely ring out for the foreseeable future. And Michael Batnick of the Irrelevant Investor served up this timely reminder of how Jeff Bezos managed to achieve such astonishing growth: By focusing on sales and not getting caught up in the critics focusing on the losses.
How Amazon took over the world. A relentless focus on the top line. pic.twitter.com/NqvWnqoj45
— Irrelevant Investor (@michaelbatnick) June 16, 2017
“Here someone dies, one day later, the whole thing doesn’t exist. You forget about it” — an anonymous Foxconn worker quoted in The Guardian about the working conditions of those building Apple’s
It’s time for the annual Paris Air Show, and Boeing
is delivering some news already. The aircraft maker has launched formally launched a new version of its single-aisle jetliner, the 737 MAX 10, and says BOC Aviation
will take on 10 of those planes, among other deals.
The Brexit talks finally got underway in Brussels, with U.K. leader Theresa May still failing to nail down a new government, as her country takes in yet another terror attack — this time near a London mosque.
Elon Musk doesn’t ever seem to stray too far from the spotlight, and that was the case again this weekend with Los Angeles Mayor Eric Garcetti saying he’d be open to Musk’s idea of digging networks of tunnels to help alleviate traffic. “Like many other cities have, I’d love to see maybe even with the new tunneling technology that people like Elon Musk is looking at, whether we could have a quick and direct route from LAX to Union Station,” Garcetti said.
Apple, Amazon and Netflix are all about 1% higher in premarket, as techs look set to get a breather from the selling today.
It’s a real quiet start to the week on the data front, with nothing major on tap for Monday and Tuesday. Later this week, we’ll get some numbers from the housing sector when existing home sales hit on Wednesday and new home sales hit Friday.
$299 — As you can see by the chart below, that’s how much the average “gig economy” worker earns per month, according to a Priceonomics study.
Another attack in London, this time Muslims were the target and the media opts to describe it as a “vehicle collision.”
Pamela Anderson explains why her heart stands with Julian Assange.
Oliver Stone’s “Putin Interviews” are a fawning portrait.
Everyone said that Old Europe was dying, but it sure doesn’t look like that now, especially compared to what we’re seeing in Washington.
New York could have looked a lot different than it does today.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.