The S&P fell roughly 3.5% during Thursday’s trading session.
The drop was led by growth stocks, namely “stay at home tech” (Apple, Zoom, Nvidia, Microsoft), communications (Facebook, Netflix), and consumer discretionary (Amazon) stocks. The S&P ex tech is down only ~2%. Despite this drop, the S&P is still up 5.6% since July 31
and those growth sectors are up ~8%. (Chart below)
It’s not unexpected that a small rotation away from growth (tech/communication/consumer stocks- “stay at home stocks”) may take place as these sectors have run well ahead of others during the recovery. Likewise, we’re experiencing an easing of the lockdown and the recent
jobless claims was better than expected.
All things considered, this is a healthy correction and doesn’t suggest that we’re headed for rougher waters. As much as we all enjoy a parabolic move in the stock market it usually ends worse than a choppy trend line up.
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