The tech sector showed its strength Monday as Wall Street's fears of a major stock market crash dissipated. Toward the end of market close, shares in tech's so-called "big five" -- Apple (AAPL), Google (GOOG), Netflix (NFLX), Facebook (FB) and Amazon (AMZN) -- managed to survive another difficult day for stocks.
Overall, the Nasdaq closed down just under 4 percent, while the Dow Jones Industrial Average was down 3.5 percent and the Standard & Poor's 500 was down about 4 percent. All major indexes rebounded from a steep drop at the beginning of trading.
The star of the day was Apple, whose stock price closed at 103.12, down 2.5 percent Monday after falling more than 10 percent in an initial swoon at the open of the Nasdaq. Google finished at $589.43, down 3.76 percent, while Facebook finished at $82.76, falling 3.83 percent.
"If you’re looking for snapback potential, you’re going to get the best bang for your buck from tech. If that global outlook is a positive one, we’d expect tech to lead us out,” Alex Gauna, managing director for technology research at JMP Securities, told the Los Angeles Times.
Netflix and Amazon were less lucky. Netflix finished at $96.88, falling 6.81 percent, while Amazon finished at $463.37, suffering a fall of 6.29 percent, both underperforming the market but clawing back from losses earlier in the day.
At market opening, things looked a lot bleaker. Apple opened at $95.17, down 10.01 percent. Google opened at $572.86, a 6.58 percent fall. Netflix had fallen 14.7 percent and opened at $88.67, and Facebook dropped 12.13 percent, opening at $75.62. Amazon opened to a 6.36 percent decrease and was trading at $463.03. But by noon, tech stocks had already bounced back from an opening tumble to move towards their previous close prices.
Traders warned its too soon to draw any long-term conclusions about the market. "Maybe this is the big one in terms of the earthquake and then there are lot of aftershocks that can go on for days and weeks," said Paul Hand, managing director at RBC Capital Markets, speaking to Toronto's the Globe and Mail.
Today's tumble was "the kind of thing that markets should do regularly to let steam off," said Roger McNamee, co-founder of Elevation Partners, on CNBC. McNamee noted the global link between events and market prices. "Yes, there really is a connection around the world. When things go bad in China, we don't get a free pass," he said.
McNamee said the initial drop in the markets could have had as much to do with the technologies used in trading as any business reality. "I think that was the algorithms panicking, in a metaphorical sense," he said. "They were freaking out because what happened in China was something that was not in anybody's math, and so the market just had a brief freakout."