Stocks declined for the second straight session
Tech stocks have had a tough time over the last few months, as markets have realized that the sector faces a number of headwinds. The tech-rich Nasdaq Composite Index has recovered since Christmas, but the index declined by nearly 1% on Monday, January 14. Stocks have now seen two consecutive sessions of decline.
Tech stocks and broader markets fell on Monday on evidence of more signs of slowing global growth. China, the world’s second-biggest economy, posted an unexpected decline in its exports, which are still a major driver of its growth. Softening global economic data and lower-than-expected sales during the holiday season have caused companies, notably Apple (AAPL), to cut forecasts.
How you should position your portfolio in 2019
Going forward, tech stocks do face several headwinds as we have noted previously. The FAANG (Facebook, Amazon, Apple, Netflix, and Google) stocks may not see the kind of returns they have seen in the previous years, as many of those companies are showing signs of decelerating.
It’s now time to look beyond the FAANG stocks. Markets now favor growth stocks, even if the valuations may not appear particularly attractive. Smaller tech companies like Square (SQ) that are seeing their growth accelerate and that have an attractive suite of products could perform better in 2019. Strong stock selection will be key this year.