30 Oct 2020

Tough days ahead for NYSE/NASDAQ tech stocks

Tough days ahead for NYSE/NASDAQ tech stocks

Alphabet <GOOGL.O> rallied, Apple <AAPL.O> sank and Twitter <TWTR.N> tumbled after a mixed quarterly performance from top-tier technology companies that investors have relied on this year to power a stock market rally through the coronavirus pandemic.

Share swings following the reports from the tech heavyweights after the bell sent exchange-traded funds tracking the S&P 500 <.SPX> and Nasdaq <.IXIC> down about 1% each, pointing to a far weaker Wall Street opening in the days ahead.

Mostly upbeat results from Facebook <FB.O>, Google-parent Alphabet and Amazon, along with Microsoft’s <MSFT.O> strong report earlier this week, show how the largest U.S. companies have expanded their businesses and outperformed smaller rivals this year as the pandemic accelerates trends toward online shopping, video streaming and other technologies.

Alphabet and Facebook both reported strong rises in advertising sales although Facebook predicted that pandemic-related uncertainty will likely continue into 2021, making it a very tough year for the social media titan. Meanwhile, Facebook’s stock fell 1%, while Alphabet rose 7%.

After the launch of its much awaited iPhone 12, Apple fell over 5% after its iPhone sales missed estimates, although its quarterly revenue and profit beat analysts’ expectations. This wiped $100 billion from Apple’s stock market value.

Analysts expect aggregate S&P 500 earnings to drop 13% this quarter, compared to an increase of 4.5% in the tech sector, which includes Apple, Microsoft and many other of the index’s largest companies.

Twitter reported fewer new users than Wall Street expected, sending its shares 17% lower.

Jeff Bezon’s Amazon reported a record quarterly profit and forecast a jump in holiday sales, but its shares fell almost 2% after it forecast a jump in costs related to COVID-19.

Without Facebook, Apple, Amazon, Netflix <NFLX.O> and Alphabet – the “FAANG stocks” – the S&P 500 would be down about 4% in 2020, compared with the index’s 2% year-to-date rise, according to a research note from Bespoke Investment Group.