Tech Lower as Valuation Concerns Linger -- Tech Roundup

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Shares of tech companies ticked down on concerns about valuations in the sector.

While valuations are stretched in the stock market in general and the tech sector in particular, this may be a sign of sustainable momentum rather than an impending selloff, one strategist said. "We look at valuation ratios from a longer-term perspective," said Joe Bell, senior market strategist at trading research firm Schaeffer's Investment Research. "Some of the studies we've looked at show that, even going 6-to-12 months out, there's very little correlation between valuation and price action." Trouble only shows up on the charts of stocks with elevated valuations when moving out five or 10 years from the present, Mr. Bell said.

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Joe Kinahan, chief market strategist at brokerage TD Ameritrade, said the tech sector will be among the most closely watched during this earnings season. "As the president puts more emphasis on infrastructure -- too often people forget that technology is also infrastructure," he said. "And, as we continue to see improvement in Asian and European economies, I think that's going to help demand overall."

Another brokerage said software companies may build on last year's gains, despite concerns about valuations. "Heading into 2018, we see opportunities for good stock performance persisting in software based upon: 1) a strong demand environment -- our most recent Chief Information Officer survey shows strengthening software demand, 2) exposure to durable secular drivers across the group, 3) reasonable expectations for growth and margins, and 4) supportable valuations," said analysts at brokerage Morgan Stanley in a research note.

Ride-hailing company Uber Technologies closed its deal with SoftBank Group, with the Japanese investment firm becoming one of its largest shareholders after a roughly $7.7 billion investment that saw it buy shares from Uber founder Travis Kalanick and others.

Chip designer Qualcomm said it won antitrust approval in the European Union and South Korea for its $39 billion acquisition of NXP Semiconductors after agreeing to a package of measures to assuage regulators' competition concerns.

Rob Curran, rob.curran@dowjones.com

(END) Dow Jones Newswires

January 18, 2018 17:19 ET (22:19 GMT)

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