Global tech stocks stage tentative recovery after Meta rout By Reuters

By Julien Ponthus

(Reuters) -Tech stocks staged a tentative rebound across financial markets on Friday as stellar results from Amazon.com Inc (O 🙂 convinced traders not to give up on a weakened sector by a global monetary tightening cycle and the historic crash of Facebook ( NASDAQ 🙂 owner Meta.

The company, led by Chief Executive Mark Zuckerberg, saw over $ 200 billion of its market value wiped out after it issued a dismal forecast, representing the biggest single-day slide for a US company.

Meta Platforms Inc’s sell-off spilled over to other listed tech companies, dragging Wall Street deep into the red, before Amazon’s convincing earnings beat after the market closed on Thursday changed the mood.

Inspired by the results for the tech giant, Asian equities rose about 1% and Amazon’s shares listed in Frankfurt were up 12%.

Shares of social media platform Snap Inc. (NYSE 🙂 were up more than 50% in pre-market trading, after tumbling by a quarter in the previous session, in another sign that sentiment towards the sector was steadying.

The overnight volatility attracted retail buyers. Thursday’s net purchases of Meta’s shares by retail investors hit $ 231 million, a 3-1 / 2 year high according to Vanda (NASDAQ 🙂 Research, marking it the third biggest day of net purchases since January 2014.

At 1256 GMT, the European tech index was down a modest 0.4% in contrast to the 3.7% fall on Thursday, and was outperforming the rest of the pan-European index. Nasdaq was set to open higher with futures up 1%.

MIXED BAG

The fourth-quarter earnings season has been mixed for tech companies with bitter disappointments from such players as streaming giant Netflix (NASDAQ 🙂 and fintech PayPal (NASDAQ 🙂 partially offset by uplifting results from Apple (NASDAQ 🙂 and Microsoft (NASDAQ 🙂 .

Mark Haefele, chief investment officer at UBS Global Wealth Management, said the big picture for the sector was far from bleak.

“Overall, the earnings outlook is still solid, with the global tech sector on track for earnings growth of around 15%,” he wrote in a morning note to clients.

“In our base case, we expect valuations to stabilize and for strong mid-teens earnings growth to be reflected in share prices over the next 12 months.”

Many investors started trimming holdings of tech stocks even before the earnings season kicked off as future earnings growth promised by the sector loses its appeal when central banks raise rates, increasing the immediate financial rewards of holding risk-free government bonds.

Top investment banks have been recommending rotating portfolios towards stocks that do well when inflation and bond yields rise, such as banks, insurers, miners and oil companies, ever since the US Federal Reserve flagged it would start raising rates from next month.