Tech's Red October Should Flash a Yellow Light

Market swoons in recent years have failed to curb tech’s raging bull market. Photo: Michael Nagle/Bloomberg News 2 Comments By Dan Gallagher Dan Gallagher The Wall Street Journal Biography Oct. 12, 2018 7:00 a.m. ET

Tech investors should exercise caution—the highflying sector may finally have met a bear that has some bite.

The brutal selloff over the last few days has hit the tech sector hard. The Nasdaq Composite is now off nearly 9% since the start of the month, while the S&P 500 Software & Services Group and PHLX Semiconductor Index have both lost about 10%. The Nasdaq Internet Index has slid nearly 12%. The largest tech companies—which have powered much of the market’s recent gains—haven’t been spared. Apple, , Microsoft , Facebook and Google parent Alphabet Inc. have shed more than $370 billion in combined market value since the start of the month—also a 9% drop.

Market swoons in recent years have failed to curb tech’s raging bull market. Demand from both businesses and consumers for new devices and services has continued to grow, driving up sales of everything from chips to cloud-based software to online advertising.

But while overall demand isn’t expected to slow now, tech faces more unquantifiable risks. U.S. lawmakers want to crack down on big companies like Google, Amazon and Facebook for their outsize influence. And there is still the unappealing prospect of an all-out trade war with China, a key growth market for many tech firms. President Trump and Chinese President Xi Jinping are now planning to meet in late November, which means that there will

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