Nasdaq at Risk of 10% Correction as Antitrust Blows Keep Landing

(Bloomberg) -- A flurry of antitrust headlines walloped technology investors and put the Nasdaq 100 at risk of a 10% correction.

Losses were spreading among the world's biggest companies, with Amazon.com down 4.2%, Google parent Alphabet Inc. down 6.2% and Facebook Inc. falling 7%. The Nasdaq 100, which hit a record a month ago, slid 1.7%, bringing its decline since May 3 to 11% and trimming its 2019 gain to 11%.

Along with Apple Inc., the companies fell on speculation federal antitrust cops are considering investigations. A person familiar with the matter said the Justice Department is preparing to open an antitrust investigation into Google, while reports over the last three days suggested the regulators are apportioning jurisdiction over the others.

For investors, any such investigation would represent broadsides at companies that sit at the heart of the bull market. Decade-long rallies in Amazon and Google alone have generated market wealth surpassing $1.5 trillion and were instrumental in pushing the Nasdaq 100 Index up almost sevenfold since March 2009.

“The reason that they are down so much is that they don't trade at cheap multiples, and anything that could cloud the earnings picture is very damaging,” said Sameer Samana, senior global market strategist for Wells Fargo Investment Institute. “You've got managers constantly trying to outperform their benchmarks, and a lot of them are playing the outperformance in tech, consumer discretionary and communications. This may be the opportunity to start looking at other sectors where there may be some better value.”

As the tech behemoths have grown, so too have their clout in public markets. Combined, the companies that constitute FAANG, or FAAMG, make up more than 15% of the S&P 500. For the tech-heavy Nasdaq 100, it's an even greater 25%. Since the bull market began, these six companies -- Facebook, Apple, Amazon, Netflix, Alphabet, and Microsoft -- have accounted for nearly a fifth of the S&P 500's gains, data compiled by Bloomberg show.

While the Nasdaq 100 was down 1.8% as of 2:30 p.m. in New York Monday, it's equal-weighted counterpart hadn't even fallen 1%. In fact, the latter, which gives the likes of Mylan NV and Liberty Global Plc the same significance as each of the FANG stocks, outperformed the classic tech-heavy benchmark so much that it matched the the most since 2013.

--With assistance from Vildana Hajric.

To contact the reporters on this story: Elena Popina in New York at epopina@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Chris Nagi

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