Farewell, FAANGs: Big tech falls, Dow down 350 points

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The broader market fell sharply on Monday: The Dow was down about 250 points, or 0.7%, in afternoon trading, while the S&P 500 and Nasdaq lost 0.7% and 0.8%, respectively. However, all three indices were off their lows for the day.

Growth stocks in particular have been hit hard so far this year on fears of slowing inflation.

The so-called FAANG stock – the Facebook owner meta platform (Facebook), Apple (Apple), Amazon (Amazon), Netflix (NFLX) and google owners letter (Google) — all fall sharply in 2022.so there are Microsoft (Microsoft), chip giant Nvidia (Nvidia) and Elon Musk’s Tesla (Tesla).

The Nasdaq is now 9% below its most recent all-time high, putting it in danger of slipping into a correction of 10% below its most recent high. The Dow and S&P 500 are 3% and 4% below their peak levels, respectively.

This SPDR Portfolio S&P 500 Growth (spy) ETFs are already down more than 6% in 2022, while iShares Russell 2000 Growth (International Labour Organization) The ETF, which owns smaller growth stocks, has fallen 7.5% since the start of the year.
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Solita Marcelli, chief investment officer, said: “If the first week of the year is any indication of what to expect in the coming months, investors must remain nimble in 2022 and be mindful of any excess exposure they may have to growth stocks. ,” UBS Global Wealth Management’s head of the Americas said in a note on Monday.

Notably, two key value sectors, financials and oil companies, are booming.

This Invesco KBW Bank (KBWB) The ETF was flat on Monday, having gained 10% this year. Banks are the beneficiaries of higher interest rates because it makes lending more profitable.

The yield on the benchmark U.S. 10-year Treasury note rose to its highest level since January 2020, briefly topping 1.8%.

Investors will be eager to see big banks JPMorgan (JPMorgan), Citigroup (C) and FuGuo bank (World Financial Center) They will talk about higher bond yields when they report their earnings on Friday.
and Energy Options Sector SPDR (XLE) ETF, owned Exxon Mobil (XOM), Chevron (CVX), ConocoPhillips (Policemen) Shares of other oil majors and other oil majors have risen 9% this year as crude prices rose from around $72 a barrel to $78 last month.
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So not all industries will be hurt by inflation, and as the big winners of the bull market of the past few years are finally starting to lose their luster, savvy investors seem to be starting to change their portfolios.

“Technology stocks have led the market for much of the past two years,” analysts at Morgan Stanley Wealth Management’s Global Investment Committee said in a note Monday, pointing to lower interest rates and lower interest rates during the pandemic. The work-from-home trend has helped propel tech stocks.

But the prospect of higher interest rates going forward will be an issue for tech and other growth stocks.

“Global policy tightening has outweighed the estimated damage to economic growth from Covid, and tech stocks have begun to underperform,” the Morgan Stanley analysts wrote, adding that now is the time for investors to try to pick stocks aggressively rather than passively Time to rely on large indices. Led by technology leaders.

UBS’ Marchelli also noted that with the Fed raising rates, “valuations of growth companies should compress faster relative to value stocks.”

“That’s exactly what happened in the first week of the year,” she said, adding that “more speculative, very fast-growing, not-for-profit tech companies fell even more than” the top tech companies on the Nasdaq.

Investors also continued to flee cryptocurrencies. bitcoin (XBT) Prices fell below $40,000 early Monday before recovering slightly. Ethereum price fell below $3,000 before rebounding.
Bitcoin has plunged more than 10% in the past week, while ethereum has plunged nearly 20%.

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