Big Tech has powered the ferocious stock market rebound from the coronavirus sell-off, defying expectations that an economic downturn would bring an end to investors’ love affair with fast-growing but expensively priced stocks.
The so-called FANG stocks — originally Facebook, Amazon, Netflix and Google, but with Microsoft and Apple also often thrown in to the mix — became emblematic of the U.S. technology-driven rally after the global financial crisis of 2008.
They helped drag the S&P 500 up by nearly 400 per cent from its 2009 low to the beginning of 2020, leaving many other equity markets in Europe and Asia in the shade. The more tech-oriented Nasdaq 100 index climbed more than 700 per cent over the same period.
This stretched valuations. A key measure of that — the ratio between the Nasdaq 100 companies’ share prices and expected earnings — rose to more than 25 at the start