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Tech Stocks Thumb Nose At Trump Trade War Fears As These 4 Industry Sectors Rock | Stock News & Stock Market Analysis

Investors took the early-morning sell-off Friday as a buying opportunity, scooping up shares in the biotech, software, computer networking and semiconductor sectors and helping the Nasdaq retain its market leadership status.

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At 2:30 p.m. ET, the tech-rich Nasdaq composite, down as much as 1.3% in the early going, reversed off its lows and turned 0.4% higher. The Nasdaq 100, which assembles the 100 largest nonfinancial companies on the all-electronic exchange, rose nearly 0.2%.

Perhaps more importantly, the Nasdaq is finding bullish support at its still-rising 50-day moving average. The market value-weighted index, boosted no doubt by strength in FANG stocks and other tech giants, is up 4.4% year to date.

The S&P 500 briefly turned positive as well, but slipped back to a slim decline. The Dow Jones industrials, hurt by sell-offs in companies that have large chunks of business overseas, fell 0.7% after being down as much as 1.6%.

At 2676, the S&P 500 is up less than 0.1% since Jan. 1 following a 19.4% lift in 2017.

While stocks fell globally on the news that President Trump is fulfilling a pledge to impose tariffs on steel products (25%) and aluminum (10%) imported into America, some Wall Street veterans did not view the news as overly negative for the global economy.

“Steel and aluminum account for roughly 2% of world trade, so the direct impact on the global economy would be small,” John Lynch, chief investment strategist at LPL Financial, wrote in a note to clients.

Nonetheless, cyclical and economically sensitive industries bore the brunt of the market’s selling, including metal products distribution (down 2.9%), construction and mining machinery (-2%), foreign banks (-1.3%), and trucks and parts (-0.9%).

Utilities also got socked with more losses. The Dow utility average slid 1.1% and at 661 is now 15% below its December peak of 778, squarely in an intermediate correction.

The yield on the benchmark U.S. Treasury 10-year bond stood at 2.85%, down from its Feb. 21 peak near 2.95%.

Meanwhile, new dynamic growth companies emerging out of the software and biotech fields bucked the decline, thanks in part to outstanding quarterly gains in earnings and sales. They include Veeva Systems (VEEV) (sales, marketing and operations management for the biotech and pharmaceutical fields), Splunk (SPLK) (a leader in analyzing machine data to make smart investment and business decisions), Ligand Pharmaceuticals (LGND) and Arista Networks (ANET) (a leader in software-driven datacenter gear for cloud-based data networking).

Veeva has burst out of a long base with a 68.17 standard entry point. The 5% buy zone goes up to 71.58. Veeva reported better than expected fiscal Q4 results and boosted its EPS outlook for FY 2019 to $1.30-$1.33, up 40% to 43% vs. the 93 cents it earned in the fiscal year ended January 2018.

The IBD ratings for Veeva continue to rise, a good sign. On IBD Stock Checkup, the Composite Rating is now at a solid 92 and the Accumulation/Distribution Rating has improved to a C+. During breakouts from solid bases, you’d like to see this 13-week gauge on price-and-volume action to be at C+ or higher on a scale of A (heavy net institutional buying) to E (heavy net selling).

To find the top-performing stocks within the best sectors, IBD’s stock research tables highlight those with big EPS Ratings as well as those in Sector Leaders. Go to these tables by clicking on IBD Data Tables in the “Stock Lists” section of Investors.com.

Right now, the Sector Leaders show 16 names, up from 14 prior to Thursday’s sell-off. Each Sector Leader is also highlighted at the top of its respective sector within the research tables. For instance, Computer ranks No. 1 as of Thursday’s close, and two companies (Arista and Smart Global (SGH)) are featured at the top of the list because both staged their initial public offering within the past 15 years and hold an EPS and RS rating of 80 or higher.

Arista rallied more than 2.3% to 270.10 in fast turnover and is on course to finish the week up more than 9%, as well as hop back above the 10-week moving average in volume that was on pace to jump 55% above the 10-week moving average.

Wall Street expects Arista’s earnings to rise 62% to $1.51 a share in the first quarter of 2018 and 25% in Q2 to $1.68, following EPS gains of 36%, 37%, 41%, 30%, 37%, 81%, 95% and 64% vs. year-ago levels in the prior eight quarters.

Revenue is seen climbing 38% to $463.9 million in Q1 and 25% to $506.6 million in Q2.

(Please follow Saito-Chung on Twitter at @IBD_DChung for more commentary on stocks, breakouts and financial markets.)

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