The Washington PostDemocracy Dies in Darkness

Tech has surged, but too high?

Placeholder while article actions load

The world’s favorite stocks fought through to their seventh rally in nine weeks. More than $300 billion has been added in six weeks to the FAANG group (Facebook,, Apple, Netflix and Google parent Alphabet). But along with the rally has come a jump in the price of bearish equity options on Nasdaq 100 stocks, a sign of brisk demand for contracts that act as insurance should the rally falter.

Add trade tensions and a strengthening dollar, and it’s no surprise investors are on edge after FAANG shares rose twice as much as the rest of the market since May.

“That’s one reason why the closer look at tech started to occur,” said Matt Schreiber, chief investment strategist at WBI Investments. “Some of those multinational corporations could get slowed down.”

The $306 billion surge in the FAANGs in the past six weeks made up a third of the roughly $808 billion surge in the total value of the S&P over the same time.

“Tech has outperformed and is expensive in aggregate by almost every measure,” said Matthew Litfin of Columbia Threadneedle Investments. “Valuations in tech have room to adjust downward even if the underlying fundamentals and growth rates at technology companies remain robust.”

The Treasury will sell $48 billion of three-month bills and $42 billion of six-month bills Monday. They yielded 1.96 percent and 2.1 percent in when-issued trading.

— Bloomberg News