The rout in technology shares that started on Sep 3 worsened to start this week’s trading as investors continued dumping this winning segment of the coronavirus crisis. The tech-heavy Nasdaq Composite underperformed once again compared with its other key U.S. peers after suffering its worst week since March. Along with big tech names, chip stocks were crushed too as tensions between the United States and China once again flared up.
SPDR S&P 500 ETF Trust (SPY) lost 2.7%, SPDR Dow Jones Industrial Average ETF Trust (DIA) retreated 2.3%, small-cap iShares Russell 2000 ETF (IWM) lost about 1.9% while the Nasdaq-100 fund Invesco QQQ Trust (QQQ) was off about 4.8% on Sep 8. The Nasdaq is 10.03% below its closing record of 12,056.44 from Sep 2. The index has now entered into the correction territory. Chip ETF VanEck Vectors Semiconductor ETF (SMH - Free Report) lost about 4.4% on the day (see all technology ETFs here).
There were reports that U.S. sanctions could spread to businesses like Semiconductor Manufacturing International Corp., China’s largest chip fabricator, hurt the semis space on Sep 8. Over the weekend, talks were doing rounds that SMIC could join the U.S. “entity list” like telecom equipment maker Huawei back in May.
Stock-wise, Tesla lost 21.1% on Sep 8, in a sign to record its worst-day ever. The steep crash came on the heels of the electric car maker’s failure to make it to the S&P Dow Jones Indices. Shares of Apple recorded its worst three-day stretch since October 2008, according to Bespoke Investment Group, as quoted on CNBC.
Hence, we don’t see the selloff as a signal of rising market fear. It is more of profit booking of the big names. Tech shares have become guilty of overvaluation concerns, of late, amid a relentless rally in the virus-induced digital boom. Michael Darda, chief economist and market strategist at MKM Partners, also sees the current correction a “largely healthy” rotation after a massive run-up in tech stocks (as quoted on CNBC) (read: "Cash is King:" Buy These Tech ETFs to Beat Coronavirus).
In fact, the selling trend indicates that winners are emerging as the key losers now and vice versa. Against this backdrop, below we highlight a few tech ETFs that were the least-hurt amid the latest rout. The Nasdaq lost about 8% in the past five days and the below-mentioned ETFs outperformed the index (read: Don't Fear Correction: ETF Laggards Are Emerging Leaders).
ETFs in Focus
Wedbush ETFMG Video Game Tech ETF (GAMR - Free Report) ) – Down 2.9%
First Trust NASDAQ Cybersecurity ETF (CIBR - Free Report) – Down 6.6%
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) – Down 5.3%
iShares Exponential Technologies ETF (XT - Free Report) – Down 5.4%
Invesco Cleantech ETF (PZD - Free Report) – Down 4.8%
Global X Social Media ETF (SOCL - Free Report) – Down 6.6%
ETFMG Prime Cyber Security ETF (HACK - Free Report) – Down 6.9%
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