On this week’s Tape Talk, Quint and Daniel examine the recent action in the stock market and the varied reactions to the earnings coming out of the technology sector.
Early in the week Alphabet, the parent company of Google, set the mood for the week on a very positive note. Showing solid growth on both the top and bottom lines, there was a lot for investors to love. The stock moved higher in the following day’s trade and gave investors hope for the rest of the tech titans’ earnings.
Investors clearly thought Facebook would follow in the steps of it’s rival Alphabet. Facebook rallied in the days leading up to its earnings report, closing at all-time highs just before the quarterly report was due to be released. Unfortunately, its fate would not be the same as Alphabet. After Facebook reported slowing user growth and slimming margins the stock was crushed in after-hours trading, the carnage lasted into the next day and left the company with its largest single-day loss ever.
The Facebook earnings set-off a mood shift in the technology stock growth area of the market. The sector that could previously do no wrong looks to be coming under pressure for the time being as investors are forced to reassess their assumptions about growth in this space going forward.
Revisit the Plan
Pullbacks in the market, whether they come from individual stocks, sectors, or the market as a whole, should not send investors into an immediate panic. Instead, it should be a time for reflection and revisiting your financial plan. It’s a time to ensure your allocation is aligned with your goals and that you’ve been honest with yourself on the risk you’re willing to take. In the long run, sticking to the plan is the one investment that may just pay dividends in both market rallies and market fits.