After rebounding strongly from an early February market selloff, the technology sector is once again caught in wild trading thanks to the decline in FANG stocks. This is especially true as the NYSE FANG index, which tracks the 10 biggest and most active tech stocks in the world, slipped into correction territory from its Mar 12 peak.
As a result, New Tech and Media ETF (FNG – Free Report) , which offers similar exposure to investments in high-performing technology and media leaders as characterized by the FANG acronym, lost 7.9% over the past 10 days while the ultra-popular Technology Select Sector SPDR Fund (XLK – Free Report) shed 7.3%.
The initial panic was created by the social media giant Facebook (FB – Free Report) following the data breach report that sparked concerns about data privacy and security, and will likely lead to increased scrutiny and possible regulatory pressure. Then trade war fears between the two largest economies, United States and China, accelerated the sell-off as most of the tech companies do business outside the United States and are highly vulnerable to trade disputes.
Even though fears of trade war eased the next day and led to a sharp rise in the sector on Mar 26, a slew of negative news again sent the sector into a tailspin on Mar 27. Notably, the NYSE FANG index tumbled 5.6% on the day and eroded about $180 billion in market value from the index. NYSE FANG is down 6% since last week, marking the worst plunge ever.
The latest plunge came as Nvidia (NVDA – Free Report) tumbled 8% after it announced the suspension of self-driving tests, raising concerns over the new growth areas in the space. Twitter (TWTR – Free Report) also dropped 12% on expectations of further regulation on its social media platform while Tesla (TSLA – Free Report) touched a one-year low on Moody’s downgrade. All these news have raised concerns over the growth of the hottest technology trends like autonomous cars and artificial intelligence.