A nothing day has turned into a selloff, as tech stocks tumble and take the market with it. Except for the Dow, which is hitting a new all-time high.
The S&P 500 have fallen 0.4% to 2,467.59 at 1:51 p.m. today, while the Dow Jones Industrial Average has ticked up 14.85 points, or 0.1%, to 21,725.86. The Nasdaq Composite has dropped 1.1% to 6,352.31.
Earlier today, my colleague Crystal Kim observed that Fundstrat’s Thomas Lee has come out with a note on telecom stocks, one which predicted good things for the sector if the FCC gets rid of net neutrality. That’s helped the S&P 500 Telecommunications index gain 4.6%. But there’s a flip side to that debate: ” Internet companies have vocally opposed revoking Title II,” Lee wrote. “The market power of the FANG stocks is impressive. Google accounts for 80% of search. Facebook is the primary news source for 44% of Americans (Pew Research). Netflix is 37% of peak internet traffic. And these companies wield influence with their customers.” And it seems like the concerns about the end of net neutrality have hammered the tech sector: The S&P 500 Information Technologyindex has dropped 1.3%.
Nor does it help that JPMorgan’s Marko Kolanovic, a widely read strategist, released at note at 12:30 p.m. comparing the market environment to 1994 and 2001. Here’s what he wrote:
Over the past year, correlation of stocks and sectors declined at an unprecedented speed and magnitude (see figure below). A similar decorrelation occurred on only two other occasions over the last 30 years: in 1993 and 2000. Both of those episodes led to subsequent market weakness and an increase in volatility (in 1994, and 2001).
And who wants to go back to those days?