Information-technology stocks sank 4.8% Wednesday, the worst sector performance in the S&P 500 Index. The new communication-services sector, which includes many well-known tech companies, declined 3.9%, logging the second-worst performance.
It’s easy to continue to believe that IT — and semiconductor manufacturers, to name a volatile example — is a viable play over the next 10 years, but investors with short-term horizons are taking it on the chin.
But it helps to have a bit of perspective. “You don’t get +60% a year in NFLX [Netflix] without a few -15% weeks here and there,” wrote Michael Antonelli, an equity sales trader at R.W. Baird & Co., in a note on Wednesday.
That was included in this story about the neglect of value stocks during the bull market and what it might mean as interest rates rise.
Also see: Tech stocks plunge because investors are nervous — here are three reasons why
This chart shows the trailing price-to-earnings ratio for the S&P 500 SPX, -3.29% information-technology sector over the past 10 years, and helps explain why tech is especially sensitive at a time of rising interest rates and trade-war fears:
FactSet
You can see the technology sector flying high when compared to the entire S&P 500 Index.
Taking the same chart back to the end of 1999, it’s clear that valuations for tech are nowhere near as stretched as they were at that time, but that provides no comfort to investors concerned with short-term volatility right now:
FactSet
Worst tech stocks of October
In order to prepare a list of the worst “tech” stocks of October, we were forced to look not only at the S&P 500 information-technology sector, but also the new communication-services sector, which includes Facebook FB, -4.13% and Alphabet GOOG, -5.06% GOOGL, -4.63% which is Google’s holding company. Going a bit further afield, to make sure we included all the FAANG stocks, we grabbed Amazon.com AMZN, -6.15% from the consumer-discretionary sector.
That left us with 88 companies, all of which saw their shares decline Wednesday.
Let’s begin with the FAANG stocks, in the order of the acronym. Here’s how they have performed so far during October, along with Wednesday’s declines and year-to-date total returns:
Total returns Company Ticker Industry Sept. 28 through Oct. 10 Oct. 10 2018 through Oct. 10 Facebook Inc. Class A FB, -4.13% Internet Software/Services -8.0% -4.1% -14.2% Apple Inc. AAPL, -4.63% Computers/Telecom. Equipment -4.2% -4.6% 29.3% Amazon.com Inc. AMZN, -6.15% Internet Retail -12.4% -6.2% 50.1% Netflix Inc. NFLX, -8.38% Cable/Satellite TV -12.9% -8.4% 69.8% Alphabet Inc. Class A GOOGL, -4.63% Internet Software/Services -9.5% -4.6% 3.7% Alphabet Inc. Class C GOOG, -5.06% Internet Software/Services -9.4% -5.1% 3.3% Source: FactSet
Despite the lousy October performance, three of the FAANG stocks are still showing fat double-digit gains for 2018.
Here are the 20 worst-performing S&P 500 tech stocks of October:
Total returns Company Ticker Industry Sept. 28 through Oct. 10 Oct. 10 2018 through Oct. 10 Advanced Micro Devices Inc. AMD, -8.22% Semiconductors -19.1% -8.2% 143.2% ANSYS Inc. ANSS, -6.11% Software -16.6% -6.1% 5.5% Microchip Technology Inc. MCHP, -1.40% Semiconductors -15.8% -1.4% -23.4% IPG Photonics Corp. IPGP, -2.24% Electronic Equipment/Instruments -15.6% -2.2% -38.5% F5 Networks Inc. FFIV, -4.32% Computer Communications -15.2% -4.3% 28.9% Arista Networks Inc. ANET, -5.39% Computer Communications -15.1% -5.4% -4.2% Akamai Technologies Inc. AKAM, -3.74% Internet Software/Services -14.6% -3.7% -3.9% Autodesk Inc. ADSK, -6.55% Software -14.5% -6.6% 27.3% PayPal Holdings Inc PYPL, -5.72% Data Processing Services -14.1% -5.7% 2.5% Red Hat Inc. RHT, -4.15% Software -13.6% -4.2% -2.0% TripAdvisor Inc. TRIP, -7.53% Other Consumer Services -13.5% -7.5% 28.3% Salesforce.com Inc. CRM, -7.20% Software -13.3% -7.2% 34.8% Netflix Inc. NFLX, -8.38% Cable/Satellite TV -12.9% -8.4% 69.8% Cadence Design Systems Inc. CDNS, -4.43% Electronic Production Equipment -12.9% -4.4% -5.6% Electronic Arts Inc. EA, -3.96% Recreational Products -12.7% -4.0% 0.1% Nvidia Corp. NVDA, -7.48% Semiconductors -12.6% -7.5% 27.2% Amazon.com Inc. AMZN, -6.15% Internet Retail -12.4% -6.2% 50.1% VeriSign Inc. VRSN, -4.81% Internet Software/Services -12.0% -4.8% 23.1% Synopsys Inc. SNPS, -4.45% Software -12.0% -4.4% 1.8% Adobe Inc. ADBE, -6.39% Software -11.9% -6.4% 35.8% Source: FactSet
You can click on the tickers for more information about each company, including news, profiles, price ratios, ratings, charts and financials.
As you can see from Advanced Micro Devices, October’s worst performer, it is important to have some perspective. The stock is still up 143% for 2018.
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