Investors not liking darling stocks anymore: Groupon Inc (NASDAQ:GRPN), SINA Corp (NASDAQ:SINA), Yandex NV (NASDAQ:YNDX), SouFun Holdings Ltd (NYSE:SFUN)
Popular tech names like Groupon Inc (NASDAQ:GRPN), SINA Corp (NASDAQ:SINA), Yandex NV (NASDAQ:YNDX) and SouFun Holdings Ltd (NYSE:SFUN) dropped on Monday as momentum stocks, mainly technology and biotech companies that led the market’s bullish run last year, have been under pressure recently, as investors have been adjusting their positions, fleeing from momentum stocks to intrinsic-valued stocks amid tech- bubble concerns.
The recent selloff in highflying stocks overshadowed the relatively strong March payrolls report on Friday, leaving investors anxious about how much further they may fall.
A lackluster first-quarter earnings season impacted by harsh winter weather could spark a pullback, according to some analysts, with investors looking for optimism for the second quarter.
Earnings season gets under way this week, with earnings expected from financials JPMorgan Chase & Co and Wells Fargo & Co, as well as retailer Bed, Bath & Beyond.
S&P 500 companies’ first-quarter earnings are projected to have increased just 1.2pc from a year ago, Thomson Reuters data showed.
The forecast is down sharply from the start of the year, when growth was estimated at 6.5pc.
The unofficial start of the quarterly earnings season begins after Tuesday’s close, with aluminum producer Alcoa slated to release results. Banks JPMorgan Chase and Wells Fargo also report this week.
“Investors are moving out of many areas of the market that performed well last year. In particular, the Internet, social media and biotechnology industries are experiencing some notable weakness,” Russ Koesterich, BlackRock’s global chief investment strategist, wrote in afternoon commentary.
“The momentum meltdown continues to be the story,” said Art Hogan, chief market strategist at Wunderlich Securities.
Among other noteworthy gainers last year, Novadaq Technologies Inc. (NASDAQ:NVDQ), EnteroMedics Inc (NASDAQ:ETRM), Unilife Corp (NASDAQ:UNIS), CytRx Corporation (NASDAQ:CYTR) and DexCom, Inc. (NASDAQ:DXCM) all have been declining following recent selloff.
“Will investors see this as opportunity to buy the dip, or do they stay on the sidelines and wait to see earnings strength in the first quarter?” Kate Warne, a St. Louis-based investment strategist at Edward Jones & Co., which manages $787 billion, said by phone. “The fundamentals remain pretty good, but sentiment can change quickly, as we saw on Friday.”