Brendan McDermid | Reuters
US stock futures remained unchanged on Thursday evening after a broad decline in the big tech names lowered the key averages during regular trading.
Dow Jones Industrial Average futures fell only 2 points or less than 0.05%. S&P 500 futures rose 0.1% and Nasdaq 100 futures 0.3%.
The Dow ended Thursday's cash session with the S&P 500 by more than 1%. The Nasdaq Composite fell more than 3% as Microsoft and Apple each lost more than 4%. Facebook and Amazon both declined more than 3% and Netflix lost 2.5%.
Big Tech was the market leader this year as investors grappled with the corona virus pandemic and its impact on corporate earnings. Amazon and Netflix have both grown more than 47% since the beginning of the year. Alphabet and Facebook have increased by over 13% during this time.
"Concern about another technology bubble is growing," said Keith Lerner, chief market strategist at Truist / SunTrust Advisory, in a note. "There is also a growing concentration risk as the five largest stocks now make up 22% of the S&P 500 index."
However, Lerner noted that "today's conditions are largely incomparable to the mania that was observed during the technology bubble in the late 1990s".
"Absolute valuations have increased, but are below half the level reached at that time. The increasing influence of a small group of stocks poses a risk to the overall market, although the same companies also make an increasing contribution to cash flow and profits," he said said.
The losses on Thursday are due to the recent unemployment data raising concerns about the economic situation.
The Department of Labor said 1.4 million Americans had applied for unemployment benefits for the week ending July 18, exceeding a Dow Jones estimate of 1.3 million claims. The report showed a series of 15 consecutive weeks during which initial claims declined.
This is "undoubtedly sobering and a clear reminder that the pandemic is far from ready to take its toll on our economy," said Mike Loewengart, director of investment strategy at E-Trade. "While we hold on to hopes for an economic stimulus package, Americans are feeling the pain of deadlocked reopening and stagnation across the country."
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