The selloff in technology shares has driven the slide in the
to more than 10%, the traditional definition of a stock-market correction.
On Monday, the tech-heavy index fell about 2% to 12,609.16, giving the index a loss of 10.5% since it peaked at 14,094.47 on Feb. 12. With a drop of more than 310 points, the index wiped out a gain of nearly 200 points on Friday.
High-growth, high-multiple tech shares led the rally in 2020, and they are lagging badly behind the broader market in 2021. Interest rates continue to inch higher as the market anticipates robust economic growth later in the year as Covid-vaccination rates increase and infection rates improve. On Monday, the yield on 10-year Treasury debt ticked up to nearly 1.6%, up nearly a percentage point from the 2020 lows. The 10-year yielded just under 1% at the end of 2020.
Investors have moved out of tech shares into companies that will benefit from a more robust economy, such as energy and financial stocks. Within the tech sector, investors are shifting from cloud-driven, minimally profitable software stocks and buying enterprise-technology plays that should benefit from an expected pickup in corporate IT spending in the second half of 2021.
The trend is clear in ARK Innovation (ticker: ARKK), an exchange-traded fund that owns many high-multiple tech and biotech shares. The $23 billion fund fell 6% on Monday alone, increasing its loss since the Feb. 12 peak to nearly 30%.
Meanwhile, old-school tech names like
(HPQ), HP Enterprise (HPE), and
Systems (CSCO) all gained ground on Monday, as investors shifted their focus to value from growth. The
DOW JONES GLO(BA)L/DJIA”>
Dow Jones Industrial Average
rallied almost 1% to $31,802.51, while the
was off 0.5% to 3,821.36
Write to Eric J. Savitz at email@example.com
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