SINGAPORE (Oct 22): The market turmoil earlier this month wiped out trillions of dollars of value from stocks, flagging the fragility of global markets as the impact of rising rates, trade frictions and protectionism brings earnings quality under closer scrutiny. US technology giants are facing a reality check on whether their double-digit top-line growth is sustainable in the quarters to come. Therefore, there is increasing pressure to bring the valuation back down to earth.

Firms in the Standard & Poor’s 500 Information Technology Index will probably say profits climbed 19% in 3Q — the first time since 2014 that they rose less than the broader market — before the rate of growth eases to half of that in two years. The technology sector’s rally seemed to have run out of steam in the short term as a result of high expectations of leadership stocks and a legitimate softening in top-line growth. 

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