The Stock Market Is Crashing as the Tech Bubble Finally Starts to Pop

The Stock Market Is Crashing as the Tech Bubble Finally Starts to Pop

Sep 04, 2020 (MENAFN via COMTEX) —

(MENAFN – FxPro) Thursday is a bad day for U.S. equity markets. Stocks fell sharply after the recent rally hit all-time highs. The tech sector, the market leader since the rebound began in late March, is dragging down the whole stock market. The Dow Jones Industrial Average fell more than 2%, the S & P 500 slipped by more than 3%, and the Nasdaq Composite fell by 5%.

Apple was the top decliner in the Dow, falling more than 6%. The tech giant is on pace for its worst day since March. Other big tech stocks, including Facebook, Amazon, and Microsoft, also plunged sharply. The S & P 500 tech sector was down 5.6% and was on track for its biggest single-day decline since June 11, when it fell 5.8%. The sector was also heading for its first losing session in 11 trading days.

The strong rally in tech stocks has fueled a massive bubble. Most tech stocks are overvalued, so a pause is healthy at this point. Five mega-cap tech stocks make up for more than 20% of the S & P 500, holding up the entire market. The pandemic has created a frenzy for tech stocks, as more people work at home and rely on technologies. As the economy recovers, we might see a shift towards other sectors that will benefit from the recovery, such as travel stocks. The stock market rally is an illusion because it is concentrated into only a few stocks. A rotation to other sectors will result in a more sustainable rally.

The Stock Market Is Crashing as the Tech Bubble Finally Starts to Pop, CCN, Sep 3

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