Tech bloodletting approaches $300 billion

The rush to get out of U.S. tech stocks entered its third day Monday as concerns mounted over how the storied FAANG bloc will fare amid rising interest rates and slower growth. All of the FAANGs retreated, with Facebook Inc. sinking 3.3% and Netflix Inc. falling as much as 5.3%. The FANG index retreated 2.%, widening its three-day loss to 9%. This compares with a 1.4% loss for the S&P 500 over the same time. Investors have been bailing from the space since the Facebook's earnings hit Wednesday, prompting the biggest market-cap decline in U.S. history. Tech megacaps, market darlings since the 2016 presidential election,have seen investors heading for exits with the advance seen as having gone too far, too fast. "Sentiment is turning sour in FANG, especially after earnings," Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co, said in an email. "They are dragging the Nasdaq 100 down by its feet." The sell-off has widened losses in the S&P 500 Information Technology Index to 5.2%, the biggest three-day retreat since March. The rout erased $240 billion from the market capitalization of the S&P 500 Information Technology Index, to $6.3 trillion, from $6.6 trillion before Facebook reported its earnings. Sentiment on the tech megacaps has soured since Wednesday, when Facebook reported disappointing second-quarter user growth that knocked the stock down 19%. To Bank of America's Michael Hartnett, the rout in Facebook signaled a peak in tech megacaps, prompting him to recommend clients short the FAANG block.

Support is wearing thin for technology companies. The S&P 500 Information Technology Index fell below its 50-day moving average Monday, while the Nasdaq Composite Index and the Nasdaq 100 Index hover near that level. Investors last week pulled $1.4 billion from the largest exchange-traded fund tracking the Nasdaq 100 Index last week in the biggest withdrawal in seven weeks. (More: Facebook data privacy issue already identified by ESG investment screens)