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Thomson Reuters
Caroline Valetkevitch and Noel Randewich
NEW YORK / SAN FRANCISCO (Reuters) – The FANGs have taken over, and they help Wall Street erase the heartbreaking correction that hit it in February.
Facebook, Amazon.com, Netflix and Google's parent company Alphabet have driven the technology and consumer discretionary sectors to record levels in recent days. If they can carry the broader market beyond this threshold probably depends on the rush of quarterly scorecards expected soon from the four of them, starting with Netflix late Monday.
Featured player of the quartet of so-called FANG shares that have fueled market gains in recent years, Netflix has jumped 106.2% since the beginning of the year, leading the S & S index P 500 and doing one of the closest to Wall Street. monitored actions.
Oversized gains this month from a range of technology stocks, including the FANGs, brought the S & P 500 at a striking distance from its record close of Jan. 26.
To display a chart on FANG shares since January 26, click on: https://reut.rs/2LfuF8V
Still fueling gains, the stock market value of Microsoft surpbaded Thursday's $ 800 billion for the first time, below Apple, Amazon and Alphabet on the US stock market.
During a conference call Thursday, Jonathan Golub, Credit Suisse's US equity strategist, said he saw the technology and FANG companies becoming even more central in the Wall Street rally while They compete with traditional consumer companies.
"Tech will inherit the land," Golub said. "They deliver a lot more than everyone else."
Netflix recorded an average gain of about 7% the day after each of its four previous quarterly reports.
The recovery of Wall Street has been uneven. Six of the 11 sectors of S & P remain in negative territory for the year, while the S & P 500 index is up 4.8%, or 2.5% below its peak of January.
The S & P 500 technology index, which dominated last year with an increase of 37%, is up more than 15% since the beginning of the year. The Consumer Discretionary Index, which includes Amazon and Netflix, is up about 14% and is at No. 2.
To view a chart on sectoral performance, click on: https://reut.rs/2NN7AMB
While US President Donald Trump steps up a trade war with China that could hurt US consumers and businesses investors remained broadly optimistic about stocks, highlighting corporate tax cuts that boost earnings and share buybacks.
According to Thomson Reuters data, S & P 500 companies are expected to post earnings per share growth of 20.9% in the second quarter. Technology profits are up 25.5%, while discretionary consumer profits are up 16.1%, helped by Amazon.com and Netflix.
Market valuations are more reasonable today than in January, with the multiple prices / earnings of the S & P 500 index at 16, about its five-year average. It was above 18 in January when stocks began to plummet.
The Fangs are significantly more expensive than the global market, with Netflix at 111 times the expected earnings, Amazon at 106, Alphabet at 25 and Facebook at 24, which puts even more emphasis on their profits and their profits. forecasts in the coming weeks.
"These companies would be re-evaluated if, for one reason or another, their earnings or earnings growth really began to decline, but for the moment, that's not the case," said Rick Meckler, partner at Cherry Lane Investments. in New Vernon, New Jersey.
"They have the kind of growth in business that makes the envy of the rest of the S & P 500 companies."
Fueled by mbadive spending on shows like "Altered Carbon" and "O Mecanismo," Netflix said it expects to have added 6.2 million new subscribers in the June quarter. According to Thomson Reuters data, Netflix, based in California, is expected to average revenue of $ 3.94 billion, up 41 percent and earnings of 79 cents per share, up from 15 cents per share. the year before. . "NFLX may be the best global technology growth story, and we believe investors would probably benefit from any earnings weakness," wrote JPMorgan badyst Doug Anmuth in a recent client note.
(Reportage of Noel Randewich and Caroline Valetkevitch, edited by Dan Burns and Nick Zieminski)
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