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Tech Stocks Rebound on Cyber Monday: Will the Rally Continue?

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On Nov 26, tech stocks finally rebounded following huge selloffs last week. The tech sector, particularly FAANG stocks, has been suffering for a while now owing to the tariff disputes between the United States and China.

However, tech stocks have been responsible for the markets’ long rally and are still one of the best performers so far this year. Moreover, the G-20 summit, which is scheduled to take place in Buenos Aires later this week, is likely to see President Donald Trump and China’s president Xi Jinping meet regarding the escalating tariff disputes between the two countries.

Tech Stocks Rebound

Tech stocks rebounded on Nov 26, with shares of e-commerce and Internet-related companies rallying. Expectations were high that Cyber Monday would witness robust spending online. This year, Cyber Monday spending is expected to hit a record high of $7.8 billion, per Adobe Analytics.

This saw shares of Inc. (AMZN - Free Report) , eBay, Inc. (EBAY - Free Report) , GameStop Corp. (GME - Free Report) gaining 5.3%, 1.3 and 8%, respectively. Also, the FAANG family, which has been bleeding the most, rebounded. Shares of Apple, Inc. (AAPL - Free Report) , Google-parent Alphabet Inc. (GOOGL - Free Report) and Facebook, Inc. (FB - Free Report) gained 1.4%, 2.5% and 3.5%, respectively. Also, shares of Netflix, Inc. (NFLX - Free Report) gained 1%.

The tech-heavy Nasdaq 100 tumbled almost 5% last week giving up more than $1 billion in outflows. Last week, FAANG stocks had declined more than 3.6%, entering the bear territory. Interestingly, this rampage saw both Apple and Amazon losing their crowns of $1 trillion market cap.

Price Performance of FAANG Stocks in the Last 3-Month Period

Shares of Amazon, Apple and Facebook have lost 18.2%, 20.6% and 22.7%, respectively, in the last three months, while Alphabet and Netflix have declined 15.3% and 29.1%, respectively, over the same time period. Amazon, Apple, Facebook, Alphabet, Netflix and EBAY each carries a Zack Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Testing Times Ahead

Trade war fears have been taking a toll on tech stocks. Fears further escalated in October, which saw tech stocks posting their worst monthly decline since 2008. The Nasdaq declined 9.2% in October, marking its steepest monthly decline since November 2008, when it dropped 10.8%.

Moreover, renewed concerns over user data privacy and security after breaches and vulnerabilities by the likes of Facebook and Google are affecting tech companies. Understandably, investors are running away from tech stocks, which have been one of the best performers in recent years.

Although there are a few macro factors like rising interest rates and bond yields behind this rough ride for markets, tech stocks have been bearing the brunt of Trump’s tariffs. This has also seen semiconductor stocks taking a hit.

Importantly, Monday’s rebound comes ahead of the crucial G-20 summit, scheduled to be held in Buenos Aires later this week, where Trump and Jinping are likely to meet regarding the escalating tariff dispute between the two countries. Tech investors are closely awaiting the outcome of the talks with expectations of a possible resolution to the ongoing trade disputes.

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