Wall Street sees a bright side in 'healthy' tech selloff

Some of Wall Street’s biggest players are viewing the stock market's recent tech-led selloff as a bout of turbulence rather than the start of a longer slide - and they don't see it as a reason to run for the door.

Their optimism highlights how the Federal Reserve's pledge to keep interest rates at record lows and hopes of a breakthrough in a vaccine for COVID-19 have underpinned market gains this year, though many remain wary that the U.S. presidential election and massive options bets on tech-related stocks could exacerbate market swings in the remaining months of 2020.

Second-quarter reported earnings on the S&P 500 were 23.1per cent above expectations, far above the trailing five-year average of 4.7per cent, analysts at Lord Abbett said in a recent note. Prominent investor Stanley Druckenmiller - a skeptic of this year's rally - again sounded a bearish note on Wednesday, warning on CNBC https://www.cnbc.com/2020/09/09/stanley-druckenmiller-says-were-in-a-raging-mania-and-the-next-3-to-5-years-will-be-challenging.html that the stock market is in a mania fueled by the Federal Reserve.

Any selling that spreads beyond the big tech-related stocks that have led markets higher could be an indication that the pullback may be extending further, said Willie Delwiche, an investment strategist at Baird.

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