The technology sector is getting hit hard this session as we see a notable divergence among sectors in the S&P 500.
Yesterday, all the major US indices hit a new all-time high. Today, the Nasdaq is tumbling while the Dow Jones Industrial Average (DIA) extends in to new highs.
The technology sector (XLK) is down 2%, led by a 4% decline in semiconductor stocks (SMH). Meanwhile, Financials (XLF +2.3%, transports (IYT +2%) and retail stocks are all notably higher.
We have seen quick rotations in the market in recent years and it is hard to argue that the technology sector wasn't due to cool-off.
The Nasdaq 100 (QQQ -1.5%) is still up ~30% year-to-date, led by the technology giants and semiconductors.
Chip stocks (SMH -4%) are still up almost 40% year-to-date despite today's shellacking.
One culprit is cloud software company AutoDesk (ADSK -15%), which is weighing on software stocks today. The AutoCAD company cut its outlook for net subscriber additions for fiscal 2018. The stock is still up 50% year-to-date.
Meanwhile, cryptocurrencies are starting to go ‘mainstream' as Bitcoin continues to defy gravity and surge into new highs. Bitcoin is up 10% near $11,000, up 1,400% year-to-date. This morning, the President of the Federal Reserve Bank of New York William Dudley said that the Fed is looking into doing its own "digital currency". The total market capitalization of digital currencies is now over $330 billion.
Is the emergence of a new and disruptive asset class (that has many screaming bubble!) causing investors to take profits in the good ole-fashioned technology sector that has led the market higher for most of this elongated cycle? There are clearly a myriad of factors at play, but that could be one component of today's sell-off -- one that many would say was overdue.
Here is a list of other momentum-technology stocks that have been taken to the woodshed this session:
- LRCX -9%, SQ -9%, MKSI -8%, SHOP -7%, AMAT -7%, NVDA -6%, MU -6%, TER -6%, TEAM -6%, OLED -6%, WDC -6%, VMW -5%, KLAC -5%, PYPL -5%, ADBE -4%, ADBE -4%, MA -4%, TTWO -4%, FB -4%, MCHP -4%