There could be more downside ahead for tech stocks, investing expert Evan Newmark warned on Friday.
After hitting a record high at the open, the tech-heavy Nasdaq composite closed 1.8 percent lower on Friday. Shares of Apple, Facebook, Amazon, Netflix and Google-parent Alphabet all fell more than 3 percent.
“These tech stocks … most of them are still up close to 30 percent for the year. This is not a big pullback,” said Newmark, a private investor and CNBC contributor.
“There could be a lot more pullback in the FANG stocks before this is over.”
However, while valuations may be high, he certainly doesn’t believe what’s happening in the tech sector is anything like the internet bubble of 2000.
“These are real companies. They generate excellent cash flow. They are very well run,” Newmark told “Closing Bell.”
“Apple is a well-run company. The valuation is not stupid by traditional parameters. That doesn’t mean that it’s worth $150 a share. It also doesn’t mean that the company’s going to disappear tomorrow like companies did in 2000.”
Meanwhile, other sectors did well, and that could be good news for the overall market, he pointed out.
“It’s very hard, in my view, for the S&P 500 to keep on hitting new highs if it’s increasingly dependent on the tech sector. At some stage you need the financials, you need the energy sector, you need the industrials,” Newmark said. “Maybe you’re having that rotation.”
On Friday, financials received a boost from higher bank stocks, with the SPDR S&P Bank ETF (KBE) advancing 2.9 percent. Energy advanced 2.5 percent.
Jim Cahn, chief investment officer at Wealth Enhancement Group, told “Closing Bell” he doesn’t think tech was the big story for Friday. Instead, he is focused on the moves in financials and small caps.
Financials got good news after the House passed the Choice Act, the first step in gutting the Dodd-Frank banking reforms, he pointed out.
“Why not own them instead of tech stocks that have questionable futures ahead?” Chan told “Closing Bell.”
Meanwhile, small-cap stocks got a boost after it appeared that former FBI Director James Comey’s testimony on Thursday will not derail President Donald Trump’s tax agenda, he added.
“We know that tax cuts tend to disproportionately benefit small-cap stocks,” Cahn noted.
—CNBC’s Fred Imbert contributed to this report.