As we delve into the 38th week of the year, there's been a noticeable bearish sentiment surrounding tech stocks in the morning discussions of news channels. However, it's essential to scrutinize this sentiment as very few financial articles have corroborated this narrative thus far. Let's dissect the recent performance of tech stocks and explore whether this is a significant trend shift or just transient pessimism.
Tech Stocks in Global Indices
Over the past year, tech stocks have been a driving force behind the growth of U.S. indices. However, recent developments have raised concerns about the tech sector's dominance, which could potentially impact U.S. indices as a whole. One potential factor contributing to this decline is the report indicating that Taiwan's TSMC (Taiwan Semiconductor Manufacturing Company), a major player in chip manufacturing, has advised its significant suppliers to delay the delivery of high-end chip-making equipment. Even chip designer Arm experienced a downturn, with a 4.5% slide in its second day of trading following Wall Street's largest initial public offering in nearly two years.
Across the board, U.S. indices have shown declines since September 15:
- S&P 500 (US500) down by 1.31% from $4,518 to $4,459.
- Dow Jones Industrial Average (US30) down by 0.98% from $35,031 to $34,687.
- NASDAQ Composite (USTECH100) down by 1.87% from $15,525 to $15,235.
Notably, while the dip in tech stocks is evident globally, its impact on U.S. indices has been more pronounced.
Asia's Performance
In a glimmer of hope amid the global scenario, official data from China revealed that retail sales and industrial production in August exceeded analysts' expectations. This development particularly benefited consumer cyclical and basic materials stocks in Europe, as these sectors are closely tied to Chinese consumer spending.
Asian indices didn't experience the same fate as their American counterparts:
- Hang Seng Index in Hong Kong up by 0.8%.
- Topix in Tokyo up by 1%.
- CSI 300 Index in China down by 0.7%.
Although Beijing's recent initiatives to stimulate its economy and stabilize financial markets have generated optimism, a single month of positive data is insufficient to confirm a sustained path to recovery. Consequently, maintaining tight stop-loss and take-profit strategies is advisable for those considering trading HK50 this month.
Conclusion: A Tech Stock Downturn or a Temporary Dip?
Tech stocks are indeed displaying signs of vulnerability, but the question remains: are these signs significant or merely a temporary setback? The saying "buy the rumor, sell the news" comes to mind. Most media channels react to market events, which means that whatever triggered the fall in tech stocks has already transpired. As of today, financial articles have not provided a lasting reason for this brief bearish movement, so there's no compelling evidence to suggest that this dip will continue. Recessionary concerns may be whispered, but few are shouting doom and gloom from the rooftops. It's crucial to remember that if an economic downturn does occur, it will impact all stocks, not just tech.
Before deciding to short tech stocks, it's essential to consider that this recent dip could be nothing more than a market correction driven by early investors capitalizing on a prosperous year. It's too early to declare whether the tech bubble has burst or is simply experiencing a minor leak.
For reference, here's a breakdown of the performance of all Exness-listed tech stocks over the past seven days.
Notably, only one of them experienced a drop exceeding 10%:
- Apple Inc. (AAPL) down by 2.43% from $179.36 to $175.01.
- Adobe Inc. (ADBE) down by 6.31% from $564.5 to $528.89.
- Automatic Data Processing, Inc. (ADP) down by 1.2% from $248.29 to $245.31.
- Advanced Micro Devices, Inc. (AMD) down by 5.77% from $107.71 to $101.49.
- Activision Blizzard, Inc. (ATVI) down by 0.49% from $92.27 to $91.82.
- Broadcom Inc. (AVGO) down by 2.29% from $871.64 to $851.68.
- BlackBerry Ltd (BB) down by 2.18% from $5.51 to $5.39.
- Baidu, Inc. (BIDU) down by 1.81% from $138.14 to $135.64.
- Electronic Arts Inc. (EA) down by 2.1% from $123.04 to $120.46.
- Fortinet, Inc. (FTNT) down by 6.22% from $65.07 to $61.02.
- Alphabet Inc. (GOOGL) down by 0.51% from $138.1 to $137.4.
- International Business Machines Corporation (IBM) down by 1.61% from $148.38 to $145.99.
- Intel Corporation (INTC) down by 2.52% from $38.86 to $37.88.
- Intuit Inc. (INTU) down by 2.04% from $549.3 to $538.08.
- Meta Platforms, Inc. (META) down by 3.66% from $311.72 to $300.31.
- Microsoft Corporation (MSFT) down by 2.5% from $338.7 to $330.22.
- NVIDIA Corporation (NVDA) down by 3.69% from $455.81 to $439.
- NetEase, Inc. (NTES) down by 0.26% from $101.76 to $101.5.
- Oracle Corporation (ORCL) down by 10.1% from $126.71 to $113.91.
- Taiwan Semiconductor Manufacturing Company (TSM) down by 2.43% from $91.47 to $89.25.
In this complex landscape, it's prudent to remain vigilant and adaptable to changing market dynamics, as they can significantly influence asset prices and market sentiment.
