The rebound for stocks has done much to highlight and underscore sanguine investor sentiment that has buoyed most indices to at least slight gains.
As The Wall Street Journal noted on Tuesday (March 22), the Dow and the broader S&P have notched slight gains thus far into 2016 after navigating terrain that could best be described as rocky. Yet, the tech-heavy index known as the Nasdaq has been left by the wayside, with a drawdown of roughly 3.7 percent to date.
The key laggards that have dragged down the index overall can be traced to the biggest sector in the index, which is, well, tech. With continued investor worries about geopolitics and global economic bumpiness, there have been worries about growth, which has tended to be a yardstick in how investors deal with and respond to risk.
More than half the decline thus far into 2016, said research firm Birinyi Associates, is tied to a small slice of the index, tied up in 10 companies of the 2,600 that are currently listed. And, of that decline, roughly 20 percent is tied to Amazon (of course, it should be noted that seven of the 10 companies have functioned within biotech and pharma, not strictly technology). The company has seen its shares slide by roughly 17 percent this year alone and, yet, as FactSet has noted, still trades at a lofty 440 times the last 12 months of earnings. To a lesser extent, Microsoft has also been a factor in the slide of the overall broader tech index, down 2.5 percent through the year to date, and weighting can have a significant impact on market performance, of course.