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Need to Know: Don’t fall for it — Apple, Netflix and the other big-name tech stocks are just playing dead

June 19
19:05 2017

FAANG, FANG, FAAMG, OMG!… whatever your favorite tech acronym, it’s been a tough slog lately for the darlings of the stock market.

Since banging out a record high on June 8, the Nasdaq COMP, +0.71%  is down almost 3%, hobbled by declines in juggernauts like Netflix NFLX, +1.16% Apple AAPL, +1.21%  and Amazon AMZN, +1.09%

Is that the terrifying sound of the bubble popping?

Not if the Barron’s weekend cover story is to be believed. No, our call of day suggests this has merely been the pause that refreshes. A hiccup.

The reasoning? The sector’s earnings growth will continue to strengthen “as technology burrows into nearly every aspect of the economy, from consumer products to commercial and industrial applications.”

Specifically, Apple’s upcoming iPhone 8, Facebook’s FB, +0.95%  push toward two billion monthly active users and Amazon’s clear designs on conquering the world (more on that below) will all emerge as drivers in the next leg up for tech stocks.

“We might not like that these companies have gotten so big and so dominant, but they are reaching global audiences in ways that we’ve never seen any company do,” Dan Chung, CEO of asset manager Alger, told Barron’s.

And they’re still cheap. Relatively speaking.

The tech sector traded at 70.1 times trailing fourth-quarter earnings during its 2000 peak. Nowadays, that number is merely 23.9 times trailing earnings. Put that up against the 21.6 times multiple on the S&P SPX, +0.37% and it doesn’t seem so out of whack.

So up and away, right?

Key market gauges

Indeed, it is shaping up for a risk-on day. Futures on the Dow YMU7, +0.36%  and the S&P ESU7, +0.34%  are up, with the Nasdaq NQU7, +0.88%  looking at an even stronger open. Europe SXXP, +0.76%  is having an upbeat day, helped by French parliamentary election results. Asia markets ADOW, +0.43%  closed higher. Gold GCU7, +0.00%  is off, while crude oil futures CLU7, +0.35%  are up.

Read the latest in Market Snapshot

Bitcoin BTCUSD, +2.06%  prices have stabilized a bit since that big pullback last week. But the volatility probably won’t be gone long.

Read: Stay away from bitcoin — it’s complete garbage.

The chart

Obviously, the Amazon/Whole Foods WFM, +1.01%  buzz will likely ring out for the foreseeable future. And Michael Batnick of the Irrelevant Investor served up this timely reminder of how Jeff Bezos managed to achieve such astonishing growth: By focusing on sales and not getting caught up in the critics focusing on the losses.

The quote

“Here someone dies, one day later, the whole thing doesn’t exist. You forget about it” — an anonymous Foxconn worker quoted in The Guardian about the working conditions of those building Apple’s AAPL, +1.21%  iPhone.

The buzz

It’s time for the annual Paris Air Show, and Boeing BA, +0.60%  is delivering some news already. The aircraft maker has launched formally launched a new version of its single-aisle jetliner, the 737 MAX 10, and says BOC Aviation 2588, +0.00%  will take on 10 of those planes, among other deals.

See: Boeing sees big gap in the market for a revamped jetliner — but won’t rush in

The Brexit talks finally got underway in Brussels, with U.K. leader Theresa May still failing to nail down a new government, as her country takes in yet another terror attack — this time near a London mosque.

Tesla’s TSLA, +0.66%  Elon Musk doesn’t ever seem to stray too far from the spotlight, and that was the case again this weekend with Los Angeles Mayor Eric Garcetti saying he’d be open to Musk’s idea of digging networks of tunnels to help alleviate traffic. “Like many other cities have, I’d love to see maybe even with the new tunneling technology that people like Elon Musk is looking at, whether we could have a quick and direct route from LAX to Union Station,” Garcetti said.

Apple, Amazon and Netflix are all about 1% higher in premarket, as techs look set to get a breather from the selling today.

The economy

It’s a real quiet start to the week on the data front, with nothing major on tap for Monday and Tuesday. Later this week, we’ll get some numbers from the housing sector when existing home sales hit on Wednesday and new home sales hit Friday.

Read: Home builders, home sellers suddenly shy.

The stat

$ 299 — As you can see by the chart below, that’s how much the average “gig economy” worker earns per month, according to a Priceonomics study.

Random reads

Another attack in London, this time Muslims were the target and the media opts to describe it as a “vehicle collision.”

Pamela Anderson explains why her heart stands with Julian Assange.

Oliver Stone’s “Putin Interviews” are a fawning portrait.

The danger of ignoring Alex Jones. Oh, and here’s NBC’s Megyn Kelly not ignoring him.

Everyone said that Old Europe was dying, but it sure doesn’t look like that now, especially compared to what we’re seeing in Washington.

New York could have looked a lot different than it does today.

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