That’s not what’s happening now. The five tech giants, Meta Platforms Inc., Apple Inc., Amazon.com Inc., Microsoft Corp. and Alphabet Inc., at one point accounted for a quarter of the S&P 500, boasting an influence that’s greater than any comparable group of stocks since at least 1980.
Now that the group, known as the Faangs, has seen their total value shaved by 23% from the December peak, a drag that the market has no chance of shaking off. The S&P 500 is mired in its second-longest correction since the global financial crisis.
Meme stocks, such as AMC Entertainment Holdings Inc. and GameStop Corp., also crashed. A Bloomberg basket of these shares tumbled more than 60% from its 2021 peak to this year’s trough.
Day traders, who rose to prominence during the pandemic, managed to lose more than $1 billion from November 2019 to June 2021 dabbling in options on stocks mentioned on Reddit’s WallStreetBets trading forum, according to a recent study. And signs are building that the retail crowd is retreating from the market.
“When we look at the selloff that we’ve seen not just in the past week but the last couple of weeks, it’s starting to make a lot of sense,” said Art Hogan, chief market strategist at National Securities. “We’re finally getting to that point where everything is for sale, regardless of the quality of earnings. And that typically is what happens toward the end of a selloff, not the beginning.”
To Sylvia Jablonski, co-founder of Defiance ETFs, all the bearishness means now is time to go bottom fishing.
“When you see this type of broad-based selling across every single sector, asset class, crypto, the future of technology, the quality darlings, that tells me that we are likely closer to a bottom than we are to an additional major correction,” she said. “Multiples have come in, the froth is certainly off of the market, and that leads to investment opportunities.”
This article was provided by Bloomberg News.