A Volatile Trading Week put Tech Stocks in "Bubble Territory"

A Volatile Trading Week put Tech Stocks in "Bubble Territory"   After a volatile trading week, a chief investment officer said that Tech stocks are unequivocally in “bubble” territory, but that’s not to say the recent “tech wreck” is going to continue in the short term. This week, U.S. stocks closed lower for the second consecutive session on Friday, bringing an end to a volatile trading week ahead of the long Labor Day weekend. While the S&P 500 tech sector fell more than 4% for the week, intensifying speculation that the stock market shakeout was likely not over yet. The space had largely been responsible for the broader market’s strong comeback off its coronavirus lows. Jonathan Bell, a chief investment officer at Stanhope Capital thinks that we are certainly in "bubble territory" Shares of Amazon have shot up 78% so far this year, leading the so-called “FAANG” stocks. Shares of Apple and Netflix have skyrocketed 65% and 59%, respectively, while shares of Facebook and Alphabet have risen 38% and 19%, respectively, this year. Bell suggested there had been “so many good reasons” for investors to own the likes of Google-parent company Alphabet, Amazon, Apple, Microsoft and Facebook, pointing to their combined outperformance in the wake of the pandemic as something “everyone is talking about.” Bell also pointed out that the so-called “big five” tech stocks already represent around 20% of the U.S. stock market, and given how big the U.S. market is globally, the tech giants amount to 12% of the MSCI World Index. When discussing whether the tech bubble he had described could burst in the near future, Bell said “I would be saying to people that this is a bubble-type territory, but it doesn’t mean that it is going to deflate now. What we have seen in the last week or so is only an unwinding of the rise of the previous two weeks,”   You might also be interested in:

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