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FAANG Slips On Fear Of Money Tightening, Regulatory Action To Tame Big Tech

·2 min read
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By Dhirendra Tripathi

Investing.com – The FAANG pack was down 1%-2% in Tuesday’s premarket as traders grappled with multiple factors pulling the stocks lower, ranging from fears over high valuations to monetary tightening to regulatory action to tame Big Tech.  

Apple (NASDAQ:AAPL) was leading the other four, down just short of 2%. Facebook (NASDAQ:FB) was down 1.5% while Amazon.(NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Alphabet (NASDAQ:GOOG) were all lower by 1.3%-1.4%.

Most of the tech shares have been trading close to the year’s highs, propelled by record earnings on the back of pandemic-led consumption of digital services. Unprecedented liquidity sloshing around as a result of fiscal and monetary stimulus has fueled the rally, as has record amounts of margin debt.

With earnings out of the way and the U.K. and Canadian central banks now trimming their bond buying, fears are the Fed could also begin to do the same sooner even though it hasn’t so far indicated any such move. Unemployment remains high too, a number the Fed is most focused on and one that it has said that will hold it back from a premature tightening.

The Fed has on more than one occasion said it is comfortable with an inflation higher than 2% but some market makers choose to forget that on a given day.

Many Big Tech companies, particularly Facebook and Alphabet, and Apple also in Europe, are under increasing scrutiny over alleged anti-competitive practices and sharing of users’ data with advertisers and third-party apps.

On Monday, Citi (NYSE:C) downgraded Facebook and Alphabet to 'neutral' from 'buy' due to what the analyst saw as “a more challenging environment for companies dependent on internet ad growth”.

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