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Mar 29, 2018

The Wall Street Journal - MoneyBeat on March ,29, 2018.

The Wall Street Journal

This Tech Selloff Is Making Day Traders Nervous

By Ben Eisen
Morning MoneyBeat is the Journal’s pre-market primer. To receive the newsletter via email, click here.
Market Snap at 03/29/2018 07:52:25 AM ET
S&P 500 Futures 0.34%
DJIA Futures 0.29%
U.S. 10 Year 4/32
WSJ Dollar Index -0.16%
Crude Oil -0.23%
Gold 0.02%
FTSE 100 0.4%
Nikkei 225 0.61%
DAX 0.73%
Hang Seng 0.24%
CAC 40 0.61%
Shanghai 1.22%

Overnight Developments

  • Global stocks rebounded Thursday but remained on track to close the first quarter with losses. S&P 500 futures pointed to an opening gain of 0.4%.
  • The Stoxx Europe 600 gained 0.5% led by the auto sector.
  • Earlier, markets in Japan, Hong Kong and Shanghai notched small gains.
  • The Breakfast Briefing

    The selloff in tech stocks is making a group of usually bullish short-term investors nervous.
    Day traders have been posting increasingly bearish messages on StockTwits, the popular messaging forum, data from the company show. An aggregate of messages about seven big tech stocks, weighted by volume, shows just 54% were bullish, down from nearly 90% at the beginning of the year. Bearishness increased sharply over that span.
    That's one sign of just how far-reaching the recent selloff in technology stocks has been. The views generally reflect the broad investment landscape, where everyone from hedge funds to retirees is rethinking their exposure to these companies after years of rapid stock-price growth.
    In 2017, the average level of bullishness on these seven stocks was 75%, and never dropped below 63%, according to Garrett Hoffman, a data scientist at StockTwits. The S&P 500 tech sector climbed 37% that year, and it's up another 1% in 2018.
    But the S&P 500 is down 6% just in the month of March. The index's tech sector fell 0.9% on Wednesday, its ninth day of declines in 12 sessions. Hot stocks that are not in the S&P 500 tech sector, but often associated with the tech industry, fared the worst in the last session. Inc. dropped 4.4%, Netflix Inc. slid 5%, and Tesla Inc. dropped 7.7%.
    The sharp turnabout in recent sessions followed a growing controversy about Facebook Inc.'s handling of user data, which sparked broader questions about whether the technology industry could face heavier regulation. On Wednesday, Amazon fell amid speculation that the White House wants to clamp down on the e-commerce giant’s growing dominance.
    The StockTwits measure of bullishness dipped to the mid-70s as stocks sold off in February, rebounded a bit along with the broader stock market, and then plunged again in recent days.

    Key Events

    8:30 a.m.: Jobless Claims [Prior: 229,000; Consensus: 228,000]
    The number of Americans filing applications for new unemployment benefits is expected to have edged lower last week. Jobless claims were up slightly the prior week but continued to hover near a multidecade low, signaling continued health in the labor market.
    8:30 a.m.: Personal Income and Outlays for February [Personal Income Prior: 0.4%; Personal Income Consensus: 0.4%; Consumer Spending Prior: 0.2%; Consumer Spending Consensus: 0.2%]
    Personal consumption expenditures, a measure of household spending, is projected to have remained steady in February. Personal income is also expected to have held unchanged. The price index for personal consumption expenditures, a key gauge of prices, is expected to have risen 0.2% from the prior month.
    9:45 a.m.: Chicago PMI for March [Prior: 61.8; Consensus: 62.8]
    A measure of economic activity in the Chicago region is expected to have risen in March after slowing for two consecutive months. Recent readings have been weighed by weather.
    10:00 a.m.: Consumer Sentiment for March [Prior: 99.7; Consensus: 102]
    The final reading on this closely watched measure of U.S. consumer confidence is expected to show growth from the prior month. February's reading was the highest since 2004.
    10:30 a.m.: EIA Natural Gas Report
    Analysts expect government data to show natural-gas stockpiles declined by more than usual for this time of year. Storage levels are forecast to have shrank by 71.25 billion cubic feet of gas during the week ended March 23.
    1:00 p.m.: Baker-Hughes Rig Count
    The number of rigs drilling for oil in the U.S. rose by 4 last week to 804. The U.S. oil rig count, viewed as a proxy for activity in the sector, has generally been rising since mid-2016 after low oil prices depressed drilling activity.

    Stocks to Watch—Up 0.4%: Shares of the e-commerce giant dropped 4.4% Wednesday, their largest one-day decline since Feb. 8, amid speculation that the White House wants to clamp down on its growing dominance.
    GameStop—Down 0.7%: GameStop said revenue rose 15% in the most recent quarter from a year earlier, topping analyst expectations. The electronics and video game seller also gave upbeat earnings forecasts for the 2018 fiscal year.
    Verint Systems—Flat: The analytics company beat on earnings and revenue in the most recent quarter, with sales climbing 7.7% from a year earlier.

    Number of the Day

    $32 billion
    Amazon lost $32 billion in market value Wednesday after a report that the White House wants to clamp down on the e-commerce giant's growing dominance.

    Must Reads

    Facebook Limiting Information Shared With Data Brokers: Facebook is curbing the information that it exchanges with firms that collect and sell consumer data for advertisers, as the social-media giant tries to calm an uproar over its handling of personal information.
    DocuSign Files for IPO: Electronic-signature company DocuSign Inc. has filed preliminary documents for an initial public offering.
    Why Are States So Strapped for Cash? There Are Two Big Reasons: The proportion of state and local tax revenues dedicated to Medicaid and public pensions is the highest since the 1960s.
    Tesla Bonds Reach New Low, Stock Falls Further After Downgrade, Accident: Selling in Tesla bonds intensified Wednesday, driving prices to fresh lows, a day after the electric-vehicle manufacturer suffered a credit-rating downgrade.
    Big Tech’s Decline Hits a Heavily Owned Stock Sector: Investors piled into hot technology stocks last year and reaped outsized gains. Now the sector’s sharp reversal stands to have the opposite effect.