Most big techs are now trading below their June lows, dragged by macro concerns, which have not spared the broader market either. Techs have led the market sell-off once again and this is evident from their relative underperformance versus the broader market.
The Technology Select Sector SPDR Fund XLK is down about 26% year-to-date compared to the roughly 20% pullback by the S&P 500 Index, which is considered a broader market gauge.
Microsoft Latest To Retest June Lows: The Fed-induced sell-off on Wednesday dragged Microsoft Corporation MSFT down by 1.56% to $238.95. Intra-day, the stock dropped to $238.91.
This took the software giant’s stock below the June 13 closing low of $241.75. On an intraday basis, the stock previously bottomed at $241.51 on June 14.
Microsoft’s tech peers, including Meta Platforms Inc. META and Alphabet Inc. GOOGL GOOG were already trading below their June lows ahead of Wednesday’s session.
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Alphabet closed Wednesday’s session down 1.84% at $99.28, which incidentally is its lowest level since Feb. 2, 2021. Amid the June sell-off, the stock bottomed at $106.03 on a closing basis and $105.14 on an intraday basis, both occurring on June 16.
Along with the macro and geopolitical concerns, Meta is haunted by fundamental issues as well. The company has taken a big hit from Apple’s 2021 privacy changes, while it is also facing increasing competition from China-based ByteDance-owned TikTok.
Meta’s closing level of $142.12 on Wednesday represented the lowest level since January 2019. In June, the stock had dropped only to $155.85.
Apple, Amazon Relative Outperformers:
Apple Inc. AAPL
has held up amid the current lean patch. Historically, the Cupertino giant fares better in the second half, as its key hardware launches and important selling seasons fall during this time of the year.
Despite criticisms from some quarters that there isn’t much novelty in the latest iteration of Apple’s iPhones, preorders suggest strong uptake, notably for the high-end models. This should sound music to Apple investors, given the positive impact it can have on margins.
Apple slid 2.03% on Wednesday before settling at $153.72. This compares to the June closing low of $129.88 on June 16.
Amazon.com Inc. AMZN, which underwent a 20-for-1 stock split on June 6, closed Wednesday at $118.54 compared to the June 15 low of $103.66.
Benzinga’s Take: Given the Fed decision is in the rearview now, the equity market could see a revival in the coming sessions. Although the Fed has signaled sustenance of a more aggressive stance until inflation is brought under control, economists widely expect the central bank to go easy on rates. The November Fed meeting, which happens only days before the mid-term polls, could make the central bank lean toward a more modest rate hike, they opine.
This coupled with the customary year-end rally could give a nice lift to the tech stocks, provided economic fundamentals do not deteriorate any further.