VMware slipped 2.5 percent in Germany after the software maker predicted quarterly sales that may miss analyst estimates amid a tougher environment for closing large contracts. Cree Inc. slumped 12 percent after the maker of light-emitting diodes posted first-quarter profit below projections and its earnings forecast for the current period disappointed analysts. Yahoo added 2.7 percent in New York, and Broadcom Corp. rose 6 percent after third-quarter sales topped estimates.
Oct 21, 2014 2:44 AM ET<<"Options pricing in a 10 percent decline in the Powershares QQQ Trust Series 1 (QQQ) ETF cost 8.9 points more than those betting on a 10 percent increase last week, according to three-month implied-volatility data compiled by Bloomberg. That was the most since September 2012. Two of the three most-owned contracts on the ETF were bearish."
Investors concerned about future economic expansion are selling tech shares because they are more at risk in periods of slow growth, according to Robert Pavlik, who helps oversee $4.5 billion as chief market strategist at Banyan Partners LLC in New York. Internet stocks and biotechnology companies are considered to have higher volatility, or beta, than the broader market because their earnings potential is hard to predict.
“The selloff in tech stocks has a lot to do with risk-off trades,” Pavlik, said by phone. “Technology is a high-beta space and doesn’t have the ability to weather economic issues as some other sectors do. People are getting nervous.”
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