What happened and why Despite a contrary global consensus, the Nasdaq has had a year to remember. But its not over yet and despite the extraordinary gains from the tech-tracking American index, this week saw the benchmark shell 10% from its recent peak, at a record-breaking pace. 🤕 Big tech rocked... While a double-digit slip has become part of the norm in 2020, investors clearly had fingers at the ready to take some money off the table. There is no shortage on rationalising going around as to what prompted the sell-off of some of the world's most profitable and fastest-growing companies - that included Tesla (-8.91%), Alphabet (-8.29%), Netflix (-7.66%) and Microsoft (-6.81%) - but here's a couple of ideas... Rotate... Analysts have been stirring talk of a "rotation" out of tech stocks and into more steady "defensives" for a while.Short-term thinking... This tech tumble could be down to the hot air that has blown the Nasdaq to record highs as more investors turn to a stock market that remains laden with uncertainty and risk. ⛔ Rejection... Tesla's tumble, in particular, caused a stir. The electric-car pioneer reversed 22% in two days, but Elon Musk's e-machine had to wear some more personal news in recent days. Tesla was passed over for inclusion in the S&P 500 index (America's most prestigious Index), in favour of Etsy, the mega online marketplace known for craft goods. With some $4.3 trillion is invested in S&P 500 stocks via exchange-traded funds (ETFs), analysts expected that Tesla would soon get in on the action. Without that autopilot investment boost, investors took to selling the stock and banking some profit. | The Takeaway Etsy-bitsy... Given a gulf in valuation - Tesla’s $320bn dwarfs that of Etsy at $13.2bn - analysts were left scratching their heads at Tesla's S&P rejection. While Tesla may stir the loins of traders, the company has only just met the required four consecutive quarters of profits... while Etsy has reported a lucky-number-13 of consecutive quarterly profits.
