Wall Street did a duck and cover on their Silicon Valley darlings on Wednesday.
The FAANG stocks had an awful day as Netflix dropped 5.5%, Apple declined 4%, while Facebook, Google and Amazon all fell more than 2%.The tech wreck was driven by an analyst report suggested that the FANG companies would not benefit from a potential reduction as much under the Senate tax plan versus other sectors in the corporate-tax rate.
Tech stocks now pay an 18.5 percent effective-tax rate — the third-lowest among US large caps, according to S&P Global data — so the potential windfall is much lower under the the Republican tax plan moving through Congress.
The rotation out of tech was clearly pointed out by the performance of broader indices. The Dow 30 rose 103 points or 0.44%, while the Nasdaq fell 88 points or 1.27%. The S&P 500 was flat as it was caught in the middle of the tug of war.