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Data: FactSet; Chart: Axios Visuals

U.S. tech stocks continue rising even as the broader market falls, furthering the divide between the economically driven Dow Jones Industrial Average and the tech-heavy Nasdaq.

Why it matters: As earnings continue to be written down and the Nasdaq's value continues to rise, it has pushed the index to a forward price-to-earnings ratio of 34.2, well above its historical average, according to FactSet.

What's happening: "The Nasdaq 100 has beaten the S&P 500 for seven straight days, five straight weeks, 10 straight months," Bloomberg's Vildana Hajric, Sarah Ponczek and Lu Wang write.

  • "While that’s manna for bulls who own market proxies, it is also — at best — a mixed economic signal. As stirring as the rally has been, the whole thing can also be read as proof investors see the pandemic lockdown hanging around."
  • "Every time an automated, algorithmic Fang stock rallies, the theory goes, hopes for a speedy recovery in employment and consumer spending take a hit."

Between the lines: The outperformance has investors starting to sound the alarm about a bubble in the market, and particularly in tech stocks, similar to the one that formed before the dot-com crash in 2000.

What we're hearing: The bubbling IPO market in 2020 also is starting to look familiar.

  • "You see similar levels of companies with no earnings, so basically speculative investments, coming to the IPO market as we had in 1999–2000," Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America, said during a recent presentation.
  • "This is another warning sign that we’ve seen."

Go deeper

Dion Rabouin, author of Markets
Sep 28, 2020 - Economy & Business

Big Tech's share of the S&P 500 reached record level in August

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Reproduced from The Leuthold Group; Chart: Axios Visuals

The gap between the weighting of the five largest companies in the S&P 500 and the 300 smallest rose to the highest ever at the end of August, according to data from the Leuthold Group.

Why it matters: The concentration of wealth in a few massive U.S. tech companies has reached a scale significantly greater than it was before the dot-com bubble burst.

Pre-bunking rises ahead of the 2020 election

Illustration: Eniola Odetunde/Axios

Tech platforms are no longer satisfied with debunking falsehoods — now they're starting to invest in efforts that preemptively show users accurate information to help them counter falsehoods later on.

Why it matters: Experts argue that pre-bunking can be a more effective strategy for combative misinformation than fact-checking. It's also a less polarizing way to address misinformation than trying to apply judgements to posts after they've been shared.

Kendall Baker, author of Sports
1 hour ago - Sports

Locker Room wants to reinvent how fans talk sports

Courtesy: Betty Labs

Locker Room, a social audio app where fans can talk sports and spontaneously join live conversations, launches Tuesday on the App Store.

The state of play: The company behind Locker Room, Betty Labs, has raised $9.3 million in seed funding led by Google Ventures with participation from Lightspeed Venture Partners, Axios has learned.