A continued fall in tech shares in the US could rattle wider markets and hit other growth assets, reckon analysts.
On Friday, the Nasdaq tanked and fell 77 points on the open today with some of the biggest names in the sector and the world taking a hit.
A note from the heavyweight investment bank Goldman Sachs, on the trajectory of such firms, last week helped to trigger the selling.
"Friday’s sell off in some of the US’s biggest tech names was sharp and severe on Friday. But was this just a bit of profit taking after a note from Goldman Sachs questioned the $600bn increase in some tech firms’ market cap in the past year?" said Kathleen Brooks, analyst at London -based City Index.
"This is an important question that we need answered as tech stock weakness is having an impact on other growth assets today."
Apple shares down again...
Today, the most valuable firm in the world Apple (NASDAQ:AAPL) shares are down 3% after they fell by nearly 4% in the last session.
Apple got hit by the second broker downgrade in two weeks.
Amazon (NASDAQ:AMZN) shed almost 1 percent, while Netflix (NASDAQ:NFLX) shed 4% to $151.71.
"Friday’s unexpected sell off in US tech stocks surprised financial markets and has left investors with a couple of key questions. Firstly, does the sell-off in technology shares justify a broad sell off in other risky assets? Secondly, is the sell off localised, will it be short-lived and could it offer a chance for other sectors of the US market to play catch up with tech?" continued Brooks.
Neil Wilson, at etxcapital.com, noted of today's trading in Europe: "European tech stocks had already taken Wall Street’s cue from Friday.
"The Stoxx Europe 600 Technology index is off 3.7% at last look.
The VIX or volatility index has actually surged, spiking just short of 12 points, notes Wilson.
"But it remains some way short of the 16 hit in May after the Comey-Trump story first rocked markets and prompted a broader based sell-off with the Dow’s worst day of the year on May 17th.
"For now it seems like this selling is confined to a handful of stocks that had rightly or wrongly been heavily bid up all year and further juiced by momentum traders piling in."
More like consumer staples ...
He adds: "True enough these stocks have been trading more like consumer staples rather than the growth stocks they are.
"A correction isn’t necessarily a bad thing and the sell-off so far hasn’t rattled the rest of the market despite the biggest technology companies accounting for about a third of all the gains on the S&P 500 this year.
"The Nasdaq’s falls are not being matched by the wider S&P 500 or the Dow," he highlights.