As we step into week 38, there's a murmur of pessimism surrounding tech stocks in the morning news channels. However, a closer look reveals that very few financial articles are endorsing this narrative thus far. Exness, for instance, lists 22 technology stocks from around the world, and within that list, 21 of them have experienced declines over the past 7 days. The sole exception is China-based computer hardware manufacturer Canaan Inc (CAN), which managed to climb by 4.44%, moving from $1.80 (USD) to $1.88. So, it's undeniable that tech stocks are witnessing a collective drop, but the real question is whether this represents a significant trend shift or merely transient negative sentiment that will dissipate soon.
Tech Stocks in Indices
Over the past year, tech stocks have been a beacon of growth for U.S. indices. However, recent developments suggest that the dominance of the tech sector may be showing signs of weakening, potentially impacting U.S. indices as a whole. The catalyst for this decline could be traced back to reports that Taiwan's TSMC (Taiwan Semiconductor Manufacturing Company), a major player in chip manufacturing, has advised significant suppliers to delay the delivery of high-end chip-making equipment. Even chip designer Arm was not immune to this pessimism, witnessing a 4.5% slide on its second day of trading following Wall Street's largest initial public offering in nearly two years.
All major U.S. indices have recorded declines on the charts since Friday, September 15:
- US500: Down by 1.31% from $4518 to $4459.
- US30: A decrease of 0.98% from $35,031 to $34,687.
- USTECH100: A notable drop of 1.87% from $15,525 to $15,235.
Interestingly, although the dip in tech stocks is a global phenomenon, its impact on U.S. indices appears to be more pronounced.
Asia Offers a Glimpse of Hope
Adding a glimmer of optimism to the global landscape, official data from China has revealed that retail sales and industrial production in August exceeded analysts' expectations. This development has been particularly heartening for consumer cyclical and basic materials stocks in Europe, as these sectors are closely linked to Chinese consumer spending.
In contrast to the U.S., Asian indices haven't faced the same fate:
- Hong Kong's Hang Seng: Up by 0.8%.
- Tokyo's Topix: Registering a 1% increase.
- China's CSI 300 index: A modest decline of 0.7%.
While Beijing's recent efforts to stimulate its economy and stabilize financial markets have sparked hope, it's important to remember that one month of positive data is insufficient to confirm a sustainable path to recovery. Therefore, exercising caution with tight Stop Loss and Take Profit strategies is advisable for those trading HK50 this month.
Conclusion: To Tech or Not to Tech?
Tech stocks are displaying a degree of vulnerability – or are they? As the adage goes, "Buy the rumor, sell the news." Most media outlets are reactive to market events, meaning whatever led to the decline in tech stocks has likely already transpired. Furthermore, none of the current financial articles seem to provide a lasting rationale for this brief bearish movement, leaving us with little reason to believe that the decline will persist, at least for now.
While whispers of a potential recession can still be heard, only a handful of voices are proclaiming that doom and gloom are imminent. It's important to note that if an economic downturn does materialize, it will affect all stocks, not just tech ones. Until such a scenario unfolds, it's reasonable to assume that the world will continue to revolve and rely on technology.
Before contemplating shorting tech stocks, it's worth considering that the recent dip could be a market correction driven by early investors capitalizing on a strong year. It's simply too early to declare that the tech bubble has burst or is merely experiencing a minor leak.
Below is a breakdown of the performance of all Exness-listed tech assets over the past 7 days.
Notably, only one of them experienced a decline of more than 10%.
- Apple Inc. (AAPL): Down by 2.43% from $179.36 (USD) to $175.01.
- Adobe Inc. (ADBE): A 6.31% drop from $564.5 (USD) to $528.89.
- Automatic Data Processing, Inc. (ADP): A 1.2% decrease from $248.29 (USD) to $245.31.
- Advanced Micro Devices, Inc. (AMD): A 5.77% decline from $107.71 (USD) to $101.49.
- Activision Blizzard, Inc (ATVI): A modest 0.49% fall from $92.27 (USD) to $91.82.
- Broadcom Inc. (AVGO): Down by 2.29% from $871.64 (USD) to $851.68.
- BlackBerry Ltd (BB): A 2.18% decrease from $5.51 (USD) to $5.39.
- Baidu, Inc. (BIDU): A 1.81% drop from $138.14 (USD) to $135.64.
- Electronic Arts Inc. (EA): Down by 2.1% from $123.04 (USD) to $120.46.
- Fortinet, Inc. (FTNT): Witnessed a 6.22% decline from $65.07 (USD) to $61.02.
- Alphabet Inc. (GOOGL): A marginal 0.51% drop from $138.1 (USD) to $137.4.
- International Business Machines Corporation (IBM): Down by 1.61% from $148.38 (USD) to $145.99.
- Intel Corporation (INTC): A 2.52% decrease from $38.86 (USD) to $37.88.
- Intuit Inc. (INTU): Experienced a 2.04% decline from $549.3 (USD) to $538.08.
- Meta Platforms, Inc. (META): A 3.66% drop from $311.72 (USD) to $300.31.
- Microsoft Corporation (MSFT): Down by 2.5% from $338.7 (USD) to $330.22.
- NVIDIA Corporation (NVDA): Witnessed a 3.69% decline from $455.81 (USD) to $439.
- NetEase, Inc. (NTES): A marginal 0.26% drop from $101.76 (USD) to $101.5.
- Oracle Corporation (ORCL): A significant 10.1% decrease from $126.71 (USD) to $113.91.
- Taiwan Semiconductor Manufacturing Company (TSM): Down by 2.43% from $91.47 (USD) to $89.25.
