Increased investing in big tech stocks in the first half of this year has raised overvaluation concerns, while Senate Republicans’ delay to pass the healthcare bill raised doubts about whether the Trump administration can put its much awaited pro-business policies into action.
In fact, a new discouraging International Monetary Fund (IMF) report poured cold water on the entire Trump agenda. IMF believes that Trump’s economic agenda is being derailed due to the political chaos surrounding Trumpcare and has also cast doubt on Trump administration’s GDP projections. The report was more of a social political advice it had once reserved for emerging market economies, which doesn’t paint a very pretty picture.
The decline in bond yields and drop in commodity prices raised concerns of limited growth in the second half of this year. With the markets apprehending a healthy pullback after a strong run, investing in stocks that are immune to market gyrations seems judicious.
Tech Stocks Slide Again, Questions About Bubbles Arise
Double-digit gains among the biggest Internet stocks on the Wall Street have driven the technology sector to record highs in the first half of this year. The industry almost recouped the losses suffered during the dot-com bubble between 2000 and 2002. The tech sector lost a massive 80% in Oct 2002, spiraling down from the peak attained in Mar 2000.Â
Such a rise, however, has raised a lot of questions about lofty valuations, and whether investors still have faith in the fast-growing tech sector. The tech-heavy Nasdaq, which is up more than 14% this year, has been trading below its Jun 8 record close over the last two weeks, a clear indication that investors are hesitant to push the index higher.
The Nasdaq 100, in fact, had fallen 2.3% in the last two trading sessions, marking the steepest decline since Jun 9 and 12. The benchmark’s 50-day moving average, a key technical level, was also breached at the close on Jun 27 for the first time in seven months. The decline came as the European Union slammed a record $2.7 billion fine on Alphabet Inc (GOOGL - Free Report) for violating antitrust rules.
