Market Correction Is Continuing, But Changing its Message

The stock market sell-off is indeed dragging on Monday, but it just took a twist. The market is telling us something a little bit different than what it was telling us in the first leg of the selling earlier this month.

Monday, the S&P 500 fell as much as 2% by mid-afternoon. The tech-heavy Nasdaq fell 1%.

But let’s take a look at the first bit of market pressure against what we are seeing Monday. The fears are changing and so are the price movements of some of the U.S. market’s premier stocks.

Between September 2 and September 11, the Nasdaq 100 fell 10.7%. In that time, the Vanguard S&P 500 Value ETF  (VOOV) – Get Report fell 4.3%. Value bulls don’t want to hear this, but value actually began to outperform growth, even though it was in the form of downside price movement. Growth tech stocks were selling off hard as it has become clear there is a real possibility that at-home services — high-growth trends — have seen so much accelerated adoption, there may be far fewer customers to acquire in later years. This has been a classic valuation re-rating and the Nasdaq 100 is down more than 12% since September 2. Amazon AMZN is a pretty good example, as it is down 18% since September 2. Demand for e-commerce and business cloud services in the current environment has surged, giving way to a year of explosive revenue growth for Amazon. But new e-commerce users can only sign up once. The company does have a long runway of growth, seen in its young and growing logistics B-2-B segment, which businesses are beginning to move onto. Still, Amazon has likely pulled forward a lot of demand.

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