Technology stocks escape correction territory

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Technology stocks briefly touched the “correction” territory on Friday, with the recent drop in

Nasdaq Compound

extended beyond 10%. At the worst levels of the session index, it fell 11.9% compared to the close of February 12, at 14,095.47. But Nasdaq returned to the green in the mid-afternoon trade.

Even after recovering from this morning’s deep losses, technology stocks have fallen about 4% a week and about 1% a year to date, pressured by rising interest rates and a rotation of technology stocks for more sectors. economically sensitive, such as energy, industrial and finance. The 10-year Treasury’s yield is slightly above 1.56%, but eclipsed the 1.6% level at the start of Friday’s session.

The market continues to inflict particularly severe punishments on the stocks that led the way in 2020 – high multiple, high growth, as well as new public cloud stocks. THE

ARK Innovation ETF

(ARKK), a popular exchange-traded fund with large positions in large companies like Tesla (TSLA),

Roku (ROKU)

and Teledoc (RDOC), fell 2.4% in the session and fell 26% since its peak in mid-February.

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Helping the index on Friday, there was a barrage of optimistic recommendations about legacy technology stocks.

Oracle

(ORCL) is negotiating heavily on an update to Barclays,

JP Morgan

became optimistic about

Cisco

(CSCO), Goldman raised its rating by

Western Digital

(WDC) and

Morgan Stanley

hit the table

Microsoft

(MSFT). Analysts are increasingly focused on the potential of corporate technology hardware and software inventories to gain momentum from an expected increase in spending later this year. All four stocks are trading higher.

Cloud stocks have become mixed, but many names like

Palantir

Technologies (PLTR),

C3.

ai (AI),

Snowflake (SNOW),

Zoom Video Communications

(ZOOM), and

Shopify

(STORE) all remain in the red in the session. Chip stocks are mostly higher as investors look for ways to get around supply restrictions, with so-called “e-tail” stocks extending recent losses as the market anticipates the economy’s reopening in the end this year.

Around the middle of the session, the Nasdaq Composite recovered its previous losses and was close to the flat line at 12,736.66. This is about 50 points above the correction territory.

Write to Eric J. Savitz at [email protected]