Bloomberg Intelligence's 'Equity Market Minute' 10/29/2020

Gina Martin Adams from Bloomberg Intelligence discusses recent trends in the equity market, focusing on the derating of tech stocks relative to the S&P 500. Despite high valuations, tech stocks face pressure due to expected lower earnings growth compared to the broader market. The tech sector's premium pricing, even excluding giants like Microsoft and Apple, is highlighted. The forecast for 2021 suggests a significant earnings growth differential, with the S&P 500 expected to outperform the tech sector, potentially impacting tech stock valuations.

What has been the trend for tech stocks relative to the S&P 500 since early September?

• Tech stocks have been outperforming the S&P 500.

• Tech stocks have been underperforming the S&P 500.

• Tech stocks have remained stable compared to the S&P 500.

• Tech stocks have been volatile compared to the S&P 500.

Which two companies are mentioned as the biggest market cap weighted names in the tech index?

• Facebook and Tesla

• Microsoft and Apple

• Google and Amazon

• IBM and Intel

How are tech stocks priced relative to their long-term average, excluding Microsoft and Apple?

• 2 standard deviations above their long-term average

• 3 standard deviations above their long-term average

• At their long-term average

• Below their long-term average

What is the expected EPS growth for the US tech sector compared to the S&P 500?

• Tech sector: 16%, S&P 500: 25%

• Tech sector: 25%, S&P 500: 16%

• Tech sector: 20%, S&P 500: 20%

• Tech sector: 30%, S&P 500: 15%

What could the earnings differential between the tech sector and the S&P 500 lead to?

• Increased investment in tech stocks

• Continued pressure on tech stock prices

• Higher dividends for tech stocks

• Stability in tech stock prices