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FANG Stocks Rebound As Trump and Kudlow Ease Trade Tensions

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Stocks opened higher on Monday after officials in President Donald Trump’s administration downplayed the potential impact of any looming trade war between the U.S. and China. The morning’s biggest winners were tech stocks, with the so-called “FANG” group—Facebook (FB - Free Report) , Amazon (AMZN - Free Report) , Netflix (NFLX - Free Report) , and Alphabet (GOOGL - Free Report) —witnessing a slight rebound from Friday’s selloff.

Key officials in the White House appear keen to remind investors that most new tariffs are not yet in place and the overarching dispute might be settled through negotiations. For instance, on Sunday, National Economic Council Director Larry Kudlow said in an interview that the ongoing trade spat “might turn out to be very benign.”

President Trump echoed this sentiment later in the day, tweeting that any tariffs would be reciprocal and that he envisioned a “Great future for both countries!”

The S&P 500 and Dow indexes both moved about 1% higher in early Monday trading on the back of this new rhetoric. Meanwhile, the tech-heavy Nasdaq composite surged more than 1.5% after leading the selloff at the end of the previous trading week.

Several major tech giants helped push the sector’s rebound on Monday morning. Facebook bounced more than 1%, while Amazon gained about 2%. Alphabet shares popped about 2.5%, and Netflix led the FANG group with early gains of more than 3%.

Outside of the traditional FANG group, many other tech bellwethers were in the green in morning trading. Apple (AAPL - Free Report) was up more than 2%, Nvidia (NVDA - Free Report) added as much as 2.5%, and Micron (MU - Free Report) moved roughly 2% higher.

Trade tensions between the U.S. and China are likely to dominate the market’s attention for the foreseeable future, especially considering that the discussion period for proposed U.S. tariffs means that the earliest new charges might be imposed is somewhere around early August.

Still, it is possible that another strong earnings season could inspire renewed confidence in the technology space. According to Zacks Director of Research Sheraz Mian and our latest Earnings Trends report, total earnings for the sector are expected to be up 20.7% on 11.4% higher revenues. This would follow 24.2% earnings growth and 11.1% revenue growth in the previous quarter.

“The sector is firing on all cylinders, with the hardware, software as well as semiconductors industries continuing with the strong momentum that has been in place over the last few quarters,” Mian wrote.

Despite the sudden return of volatility to global stock markets, analysts have become increasingly bullish about the upcoming earnings season. Total earnings growth for S&P 500 companies is now projected to come in at 16.0%, up from the 14.1% growth that was expected at the end of January.

In absolute terms, the Finance and Technology sectors account for more than half of all positive revisions since December.

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