Saturday, 10 June 2017

Nasdaq plunges, tech bubble bursting?

Markets were mostly higher on Friday.

The Dow Jones Industrial Average rose 0.4 percent, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 rose 0.5 percent.

While most stock markets were able to shrug off the prospect of a hung parliament in the UK after Thursday's election, the Nasdaq Composite plunged 1.8 percent after a warning from Goldman Sachs that the big technology stocks such as Facebook, Amazon, Apple, Microsoft and Alphabet may be overextended.

“This outperformance, driven by secular growth and the death of the reflation narrative, has created positioning extremes, factor crowding and difficult-to-decipher risk narratives,” said Robert Boroujerdi, an analyst at Goldman Sachs, in a note.

Indeed, Mitch Goldberg, president of investing firm ClientFirst Strategy, wrote in a CNBC commentary that the current tech rally looks like the one in 1999.

“Could today be the day we remember as the one in which the tech bubble burst?” he asked.

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