‘FAATMAN’ tech stocks slim down by $1trn in latest sell-off


Wall Street’s “FAATMAN” group of leading tech stocks have suffered a renewed sell-off leaving $1trn wiped off their value in less than a week.

The group – comprising Facebook, Amazon, Apple, Tesla, Microsoft, Alphabet and Netflix – took another tumble as US markets reopened on Tuesday after the Labour Day holiday.

Tech stocks have led Wall Street to new record highs after stock markets slumped earlier in the year because of the pandemic crisis but some investors are now selling up and taking the profits.

Tesla HQ
Shares in Tesla fell sharply

The latest dip was part of a broader global share sell-off attributed to a variety of factors including US-China tensions, Brexit concerns and coronavirus case flare-ups around the world.

Worries about global recovery after the pandemic – and a Saudi price cut – saw the price of a barrel of Brent crude dip below $40 for the first time since June.

Stock indices on both sides of the Atlantic were in the red – though the FTSE 100 was cushioned from big falls as the pound’s Brexit-related weakness supported the sterling valuations of its big overseas-earning multinationals.

In New York, the Dow Jones and S&P 500 were both down but it was the tech-heavy Nasdaq that saw the most notable plunge.

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It was off by more than 2% as the tech sell-off extended to a third day – though it is still about a fifth up for the year to date.

Tesla shares were down by as much as 20% after it was surprisingly excluded from the S&P 500 index despite clearing a major hurdle to membership in July when it posted a fourth quarter in a row in profit.

SoftBank Group Corp. Chairman and Chief Executive Officer Masayoshi Son speaks during a press conference on November 6, 2019 in Tokyo, Japan
SoftBank – led by Masayoshi Son – has been investing heavily in tech stocks

The downturn in tech stock sentiment was also affected by reports over the weekend about SoftBank’s intervention in the sector.

It emerged that the Japanese conglomerate has bought billions of dollars worth of stock and stock options – deals which would have helped pump up the companies’ values.

On Tuesday, the collective market values of the FAATMAN companies had fallen by more than $1trn since 2 September.

Bill Dinning, chief investment officer at Waverton Investment Management, on Ian King Live 25/8/2020

Market rally: ‘It pays to be a little bit cautious’

That comes after tech stocks surged in recent months despite the pandemic’s destructive impact on the global economy.

Notably, Apple’s valuation has topped $2trn and seen it overtake that of the entire FTSE 100 index.

Consumers staying at home during lockdown have boosted the likes of online retail giant Amazon and video streaming service Netflix.

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Joshua Mahony, senior market analyst at IG, said: “An extended weekend has done little to quell negative sentiment that continues to permeate through US markets, with tech stocks once again at the forefront of that selling pressure.

“Sentiment for some of the most consistent performers of 2020 has soured in a dramatic manner, with Tesla leading the decline amid questions over valuations.”

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