Nasdaq futures have slumped on the news
Tech stocks have been the poster child of the pandemic. They have proven to be recession-proof and after last week, we have learnt that they are also election-proof.
Hence, they have become the market's favourite shelter during the pandemic over the last few months. Is there something that went awry? Well, let's buy the dip in tech. Is there something that went well? Well, let's buy up tech anyway.
A surge in retail traders and easy money makes for a potent combo, as we have come to learn over the past few months. But as the world captures sight of some semblance of normality, tech stocks are being punished as we see investor rotation take flight.
There are much bigger bargains out there in the market when you break things down, especially with airlines, leisure and banking stocks having been battered over the last six to seven months.
I mean, this rally since its inception has been a tech-driven one.
So, as there is some potential for the world to return to normal, or at least get better from how things are now, investors are leaving behind their shelter when it is safe to play in the rain again i.e. there are better bargains out there than frothy tech stocks.
That's one plausible explanation for the drop in Nasdaq futures now and if the market is going to start pricing in more heavily a move towards cyclical stocks again, the internal rotation within the stock market itself may keep a lid on tech gains moving forward.