U.S. stocks fell Thursday after Fed Chairman Jerome Powell said the reopening could cause temporary inflation.
Here’s what investors are saying about the markets and the tech sell-off.
Yana Barton, portfolio manager at Eaton Vance Management, said this is a run-of-the-mill pullback for stocks.
“I think it’s a healthy pullback in various pockets of the market. I think it’s a reminder that higher growth opportunities don’t come without risk. A few statistics for your viewers: The information technology sector in any given year experiences about a 15% drawdown, that is from peak to trough, and we’re about 6% to 7%, and for context, last year we saw an average stock decline 39%. So higher growth opportunities are certainly much more volatile, but I think longer-term tech remains a place you want to do because secular tailwinds are not going away.”
Lee Baker, president of Apex Financial, said it serves investors to be choosy.
“I think it does present an opportunity, but I think it requires you being selective so that you don’t get enamored with the IT sector broadly, because I think there’s a huge difference between the Microsofts and the Apples of the world, those types of companies. I absolutely think this is a buying opportunity because long term I think we’re still going to see them be the major players and continue to grow. There’s some other names, perhaps not so much. So we’re looking at the Nasdaq and the tech sector. I think we can experience a bit of a bifurcated market for a while, but I absolutely agree that this presents a buying opportunity.”
Dan Genter, CEO of RNC Genter Capital Management, explained the dynamics in the market.
“I think you’re just dealing with a pure valuation rotation. You have a situation where certainly in 2020 and during the pandemic, I mean the market was really led by a handful of stocks that really went to stratospheric multiples, and certainly Apple was one of those. I mean Apple certainly has real earnings, they have real sales, they’re going to be there, they’re going to be a major player now. But when you have people that are just following a momentum trade, eventually the professional investors say these multiples are just too hard to maintain, they start to take money off the table, they’re at least taking partial profits if not full profits. … and then the momentum players start to jump out, and I think that’s what you’re seeing.”
Roderick von Lipsey, managing director of UBS Private Wealth Management, said he’s sticking with the tech trade.
“Once we start getting remobilized, all of that technology, we still need it. We don’t want to dump it, we’re going to continue to embrace it, but not just as much as we needed to in the last year when we were all in shutdown mode. And so I think that what you’re seeing is a recalibration or reassessment of what’s the forward-looking growth opportunities and expectations of where investors can expect reasonable growth and a reasonable return on their investment.”
