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WSJ Your Money Briefing
Bullish Day Traders Roiled By Tech Selloff
00:07:53
Day Traders, a usually bullish set of investors willing to ride the market through dramatic moves, are growing nervous over the current volatility on Wall Street, and specifically the tech selloff. Wall Street Journal markets reporter Ben Eisen explains.
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- [00:00]
A
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one most trusted app based on August 2025 proprietary survey. Over 500,000 new listings every month based on average new for sale and rental listings July 2024 to June 2025 your money briefing Money and market stories from the Wall street journal. I'm J.R. whalen in New York. The current market volatility is causing concern among a typically bullish group of traders. And no, we're not talking about the fat cats on Wall Street. We'll have those details in a moment. But first, these money items you should know the percentage of individuals receiving tax audits declined for the sixth consecutive year in 2017 to reach the lowest level in 15 years, further showing the effect of budget cuts at the irs. The agency's lost nearly one third of its enforcement staffers since the 2010 peak, and the audit rate declined most for high income households, even though the treasury inspector general said over two years ago those earners should be an enforcement priority for the irs. Prices rose in February and annual inflation edged closer to the Federal Reserve's 2% target, a sign of strengthening U.S. inflation pressures that could encourage the Fed to continue lifting interest rates this year. The the Commerce Department said Thursday its Personal Consumption Expenditures price index rose 0.2% in February from the prior month on a seasonally adjusted basis. While Thursday's report offers signs of firming price pressures, inflation is still well below the Fed's 2% target. And America's low income earners boosted consumer sentiment to a 14 year high this month, while confidence among the nation's highest earning workers fell. The University of Michigan on Thursday said its consumer sentiment index was 101.4 in March. That's up from Febr. March's gain from February was largely driven by lower income households rising optimism, signaling that the U.S. s tight labor market, which is pulling workers from the sidelines and pushing up wages in pockets of the country, could be making consumers more optimistic. This is your Money Briefing from the Wall Street Journal. Welcome back, everybody. The almost daily gyrations in the stock market not only capture the headlines, but they cause the most seasoned high rollers on Wall street to scratch their heads. But it's also giving day traders a usually bullish set of short investors reason to rethink things as well. And Wall Street Journal reporter Ben Ison is here to discuss. So Ben, a lot of times these day traders are not typically phased by the types of volatility that we're seeing.
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C
Yeah, this is a group of people that have been. They basically ride the momentum in the market oftentimes. So the momentum in the market has been going up. It's been very strong in tech stocks for most of the last. Most of the bull market actually, but especially in the last year or so when tech st rose a lot. But as you've seen the sell off deepen in tech stocks over the last couple days, the sentiment has really started to decline among day traders. This measure that we looked at, we basically took data from a forum called stocktwits, which is where day traders often post ideas and have discussions and stuff. And a lot of their messages can be classified into bullish or bearish. It's basically looking at those messages and the share that's bullish versus the share that's bearish. And you've seen that really start to take a dive recently.
- [03:37]
B
And these are traders that have a little bit more internal fortitude than a lot of other people. They can sort of buckle in for the ups and downs. And it's got to be kind of significant that they are being roiled by this.
- [03:51]
C
Yeah, definitely. These are guys that tend to get in and out often the same day, sometimes within minutes or hours.
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B
These are like guys in the movies we see that trade in and out and make a lot of money. And you wonder, how can I be like him?
- [04:05]
C
Yeah, sometimes like that. Sometimes sitting in a basement somewhere playing with very little money. But everyone's different, of course. But yeah, these guys tend to talk a lot about what they're doing and how they're doing it and looking for little pops or dips in the market. And recently there have been a lot of dips.
- [04:28]
B
So aside from the day traders, what other categories of traders are you seeing? How are they responding to the volatility in the market?
- [04:34]
D
You know, it's really causing kind of a broad rethink of the sector. And this is of the tech sector you're talking about of the tech sector. A broad rethink of the tech sector. And this is one of the most heavily owned, probably the heavily most owned sector. Over the last year or so, hedge funds have piled into stocks like Facebook and Amazon and hold other companies like Apple and Microsoft. You also have fund managers who have beaten their benchmarks recently. In large part, this was over the last year or so. Beaten their benchmarks due to their holdings of these big tech stocks. I was even talking to an active ETF manager the other day who focused on tech stocks, but recently he was selling his shares of Facebook and some of his shares of Google. It kind of makes you think, and it's partially because these stocks have gone up so much that once they start to decline, there's a question about
- [05:35]
B
is it like a cascading fall?
- [05:37]
D
Yeah. Once you have the kind of profits that you've gotten over the last year, you don't want to be greedy and continue to hold on to these companies if you think they've risen as much as they're going to. So that's kind of the question on a lot of people's minds.
- [05:53]
B
These stocks that you're talking about, these carry a lot of weight in the NASDAQ and the nyse, for example, they move the Dow Jones Industrial Average pretty significantly if they go up or down by a significant amount.
- [06:06]
D
Yeah, definitely. I was looking at Apple, which is the largest US Company by market cap. That means it has a much bigger share of the S&P 500 than any other company. And during the February sell off that we had, the S and P and Apple moved in the same direction every single day during that period. So when stocks were falling, Apple was falling. When the S and P was rising, Apple was rising. And part of it's a little bit of coincidence, but a lot of it is the fact that you have Apple just moves the market so much. Then when you broaden that out, the tech sector is worth about 25% of the S&P 500, which is a lot bigger than any of the other sectors.
- [06:52]
B
You know, you talked about the ETF manager that you spoke with, and it's understandable that the person was selling Facebook because Facebook is going through some tumultuous times now. But you also mentioned that the person is selling Google. And while the person might want to just back off of greed and collect some profits at the same time, seems like there's sentiment that's bleeding over into consideration of companies that are really not going through going through fire right now. Google is not going through what Facebook's going through right now.
- [07:22]
D
Alphabet is, the parent company, has kind of stayed out of the fray of the controversy involving user data. At the same time, it does have a small social media or it has a social media operation that's part of its broader business. And you've had social media stocks generally start to sell off because there are some questions, and maybe it's just a bit it's more investor sentiment than anything else, but questions about what's going to happen to how will users use social media in the future and will there be more regulation on the way they work that could trim profits? All of these are very unanswered questions at the moment. But when you're dealing with stock prices that react to pretty much anything, it's enough to bleed over into broader parts of the market.
- [08:09]
B
All right. Well, many chapters of this to come as we see how the markets respond going forward. That's Wall Street Journal markets reporter Ben Isen joining us here in our studio. Ben, thanks for being with.
- [08:19]
D
Thank you.
- [08:20]
B
And that's your Money Briefing. I'm JR Whalen in New York for the Wall Street Journal.
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This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day, but what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. Listen@schwab.com WashingtonWise.