Tech stocks continue selloff in premarket trading as Nasdaq futures are deep in the red on a quadruple witching day. Stocks fail to follow through on Fed rally as investors turn to value investing. FedEx rallies on better-than-expected earnings report. FAANGM stocks are weighing down indices.
, now Alphabet . Over time, Microsoft was included to the group, which created the FAANGM acronym.
What all of this data means is that a great portion of the S&P 500’s performance is based on just six stocks. As investors turn from growth to value, they’re turning from stocks like these that have high valuations. Meta has a forward P/E ratio of 23.1, Amazon is 66.7, Apple is 30.7, Netflix is 46.6, Alphabet is 26.4, and Microsoft is 34.7. The S&P 500 without FAANGM stocks has a P/E ratio of 17.8.
Rebalancing is also following one of the oldest stock market idioms, “buy low and sell high.” When you rebalance, you sell a portion of your winner, which is “high”, and redistribute it to your underperforming stocks, which are “low”. Therefore, if and when the markets shift, those underperforming stocks may be positioned to take the lead in your portfolio, while the old leaders aren’t a big risk to the portfolio.occurred ahead of recessions . The 2020 pullback was related COVID-19.
First, the yield curve is positive, which means the difference between the 2-year Treasury yield is lower than the 10-year Treasury yield. However, the curve has been flattening. In March, the ratio between the 2s and 10s was around 1.6. As of Thursday, it was 0.78. If the ratio reaches 0.0, it’s flat, and if it turns negative, then its inverse. An inverse yield curve commonly precedes a recession by up to 20 months.
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