US technology stocks rebounded on Thursday after a broad sell-off a day earlier when investors cashed in on profits ahead of a vote on Donald Trump’s tax bill.
The US Senate on Wednesday voted 52-48 to begin formal debate that could lead to a full vote on the bill later this week. This bill aims to cut taxes on corporations and individuals.
But Congressional Republicans had to reformulate their bill to soothe worries about how much the tax cuts would hurt expand the federal deficit.
Funny to hear the Democrats talking about the National Debt when President Obama doubled it in only 8 years!
— Donald J. Trump (@realDonaldTrump) 30 November 2017
The only people who don’t like the Tax Cut Bill are the people that don’t understand it or the Obstructionist Democrats that know how really good it is and do not want the credit and success to go to the Republicans!
— Donald J. Trump (@realDonaldTrump) 30 November 2017
The so-called FANG stocks including Facebook Inc. (NASDAQ:FB), Amazon Inc. (NASDAQ:AMZN), Netflix Inc. (NASDAQ:NFLX) and Google parent Alphabet Inc. (NASDAQ:GOOGL) slumped on Wednesday following a successful run this year.
Shares in Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) and Nvidia (NASDAQ:NVDA) also plunged.
The slide in tech stocks saw the Nasdaq post its biggest one-day drop in more than three months on Wednesday.
“It’s the tax bill hurting tech,” Frank Ingarra, head trader at NorthCoast Asset Management LLC, told Bloomberg.
“When you have something that’s got so extended and done so well, and people start thinking about these things, of course you’re going to have profit taking.”
Facebook, Netflix and Apple lifted by upbeat broker remarks
On Thursday tech stocks clawed back gains in US pre-market trading with some supported by positive analyst comments.
Facebook shares edged higher after MKM Partners analyst Rob Sanderson raised his price target to US$240 from US$200 , saying the social media network is to be the best investment among mega-capitalisation companies and that revenue consensus expectations are overly conservative.
Sanderson also lifted his price target on Netflix to US$245 from US$230m as he raised his 2018 outlook on the expectation that the video streaming website is yet to reach its peak year for total subscription additions.
"We continue to view Netflix as the large cap with the most potential for market cap appreciation over the next three to four years," he said.
Apple received a boost after Piper Jaffray analyst Michael Olson said he sees at “super-long cycle” of iPhone upgrades. Jaffray said the company could release a slightly enhanced iPhone X and reduce the price of the original model released in early November.
"We believe an elongated iPhone cycle in FY18, followed by a wider array of iPhone X 'offspring' in Fall 2018, along with growing awareness and interest in augmented reality (fueled by developers populating the App Store with new use cases and, longer-term, addition of rear facing 3D sensor), will all push out the need for Apple to answer the question of 'what's next?'” he said.