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Bruising stock selloff underscores market risk during coronavirus turbulence
There’s opportunity in financials, consumer discretionaries, energy stocks: Expert
The Fitz-Gerald Group Principal Keith Fitz-Gerald, Spotlight Asset Group CIO Shana Sissel and Greg Branch of 1847Financial, add their analysis to today’s markets.
Stockholders are licking their wounds this Labor Day weekend after a bruising two-day selloff nearly tipped the tech-heavy Nasdaq Composite into a correction.
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Two days of heavy selling pushed the benchmark index down by as much as 9.8.% before it began paring losses.
By the time the dust settled, the Nasdaq had lost 6.17% and the S&P 500 had shed 4.3%, both avoiding the 10% drops from recent peaks that would have constituted corrections and dealt a blow to market sentiment still grappling with a downturn caused by the global COVID-19 pandemic.
NASDAQ COMPOSITE INDEX
For now, both indexes are still far above their March lows when the pandemic shuttered broad swaths of U.S. industries. The Nasdaq had surged as much as 76% off its bottom while the S&P 500 had rallied 60% as the Federal Reserve took unprecedented steps to stabilize the economy.
The massive gains and the subsequent selloff alike were driven by heavy investments in huge Silicon Valley companies that wield outsize influence on the indexes.
Investors have crowded into Amazon Inc., Apple Inc., Alphabet Inc., Facebook Inc., Microsoft Corp., Netflix Inc., Nvidia Corp. and Tesla – driving their market capitalization to 48% of the Nasdaq before the two-day swoon began. The seven stocks excluding Tesla made up 28% of the S&P 500.
“This may not be the biggest bubble of all time, but this is the most concentrated equity market of all time,” David Rosenberg, chief economist and strategist at Toronto-based Rosenberg Research, told FOX Business.