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The
Dow Jones business average
outweighed the weakness seen elsewhere on the stock market on Thursday – and would have done better if it hadn’t wanted to
Apple,
Microsoft,
and
Salesforce.com,
the three largest technology stocks in the benchmark.
The Dow has gained 137.39 points, or 0.4%, to 33,152.76, passing through
S&P 500,
which has fallen 0.5%, and the Nasdaq Composite, which is off 1.5%. The
QQQ Invesco
trade-traded funds (QQQ), which oversees the
Nasdaq-100,
decreased 1.9%.
Apple (AAPL) fell 2.3% to $ 121.93 on Thursday, and as the largest U.S. stock by market value, it is hitting the S&P 500 and Nasdaq indices, which are under pressure. market.
The Dow, however, is under price pressure. And because of Apple’s very low price – it’s 22nd by price – the tech giant has cut about 19 points off the Dow. Salesforce.com (CRM), although a much smaller company, has lost about 17 points, even though it has fallen just 1.1% to $ 210.75, thanks to that higher price. Microsoft (MSFT), down 1.9% at 232.60, has shaken just under 30 points off the blue-chip benchmark. Add to that, and the Dow would be up nearly 200 points.
The Dow has stocks at higher prices, however
UnitedHealth Group
(UNH), up 2.6% to $ 361.44,
Sachs Goldman
(GS), up 2.5% to 353.51, and
Home Center
(HD), which has gained 1.6% to $ 284.41. They resist tech loss, and then some.
Is there anything wrong with Apple and the other tech stores? Not at all. They are still good companies making a lot of money. But the stocks in the Nasdaq are expensive – very expensive. Michael Dard of MKM Partners notes that the index is trading at 31 hours, far above where it was in the previous cycle. And with rising yields, that valuation is likely to come under pressure. The stocks and assets most at risk include the stocks in Nasdaq-100 “trading with double-digit price / sale ratios,” special purpose construction companies, large stocks popular on Reddit, and cryptocurrencies.
“[All] all else being equal, higher discount rates will reduce the present discounted value of expected future cash flows, Darda writes. “This could be a problem for stocks and stocks that are already trading high to normal discount levels and current liquidity levels.”
In fact, it probably already is.
Write to Ben Levisohn at [email protected]