Alphabet, Microsoft Have ‘No Room’ for Error as Tech Rally Fades
- Software and search giants to kick off big week of earnings
- Cost to hedge downside risk rises on worries of crowded trade
A Microsoft store in New York, US.
Photographer: Yuki Iwamura/BloombergThis article is for subscribers only.
Stock bulls who rode megacap tech shares to double-digit gains this year have had little reason to stick around lately. Now they’re counting on earnings from Microsoft Corp. and Alphabet Inc. after markets close Tuesday to help restart the rally.
Rising rates have made already stretched tech valuations look increasingly expensive just as China and the US step up tit-for-tat regulatory restrictions. Israel’s war against Hamas has made risk assets a more dangerous bet. And the Federal Reserve’s next moves hang over it all. Still, with virtually nowhere else to turn in the equity market, Big Tech remains the most-crowded trade among fund managers, according to Bank of America Corp.