While most other sectors have suffered heavy losses or are barely in the green, tech has soared to new highs.
Now we face an important moment that hints at a looming crash.
Not only is the stock market overvalued by practically every indicator, but now the big players in the market are experiencing some downward motion.
The FAANG stocks — Facebook, Apple, Amazon, Netflix, and Google — all reported earnings yesterday.
Due to a mix of falling short of expectations and high valuations, all of FAANG stocks except Google tanked.
All of those stocks went down 5% or more today, and while Google started off strong, it shed over 3.5% since the start of the day but still ended in the green.
High flyers also got decimated today.
You might say that these are just 5 stocks. How can they have such a big impact on the stock market?
The answer resides in indexes…where these 5 stocks account for 15% of the S&P 500’s gains. Without these stocks, the S&P 500 is down for the year.
These stocks were vital for fueling the rally for indexes such as the S&P 500 and NASDAQ. If these stocks go down, they’re taking the index funds with them.
And we’re not just talking about stocks that are a big percentage of the index fund. We’re talking about giant companies that have a potent sway over consumers, sales, and the economy. These are the stocks you look at to get an idea of how the stock market will perform in the future.
Combine that with the current economic climate, lack of stimulus, and an upcoming election, and we have a nasty combination.