The stock market was broadly lower on Friday, with the Dow Jones Industrial Average (^DJI 0.23%) down 0.13% at 12:05 p.m. EDT. The tech-heavy Nasdaq Composite was the worst performer among the major indexes, hurt by an analyst warning about tech stock valuations.

That warning pertained to Dow components Apple (AAPL -0.60%) and Microsoft (MSFT 0.45%), which are trading at historically high valuations after months-long rallies. Both stocks slumped on Friday, as did shares of Home Depot (HD 1.01%) following a separate analyst warning.

A risk dial turned to maximum.

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Barclays warns about big tech valuations

Mega-technology stocks like Apple and Microsoft have led the way since the market bottomed out earlier this year in the throes of the COVID-19 pandemic. Shares of Apple are up around 46% year to date, while shares of Microsoft have gained roughly 26% in the same timeframe.

This rally in tech stocks has pushed valuations to historically high levels. So high, in fact, that analysts at Barclays compared the current environment to that of the dot-com bubble two decades ago. "Measures of equity valuations are now at 2000 dot-com bubble levels and appear to be pricing in an ideal scenario," Barclays analysts said. Barclays cut its rating on Apple, Microsoft, and non-Dow tech giants Facebook, Alphabet, and Netflix to "market weight."

Both Apple and Microsoft stocks were trading for around 40 times earnings in early September. Following a quick sell-off this month, Apple stock currently goes for 33 times earnings, while Microsoft stock is priced just below 35 times earnings.

Apple has done well during the pandemic, unexpectedly growing sales in its most recent quarter. But demand for its gadgets has no doubt been boosted by economic stimulus, and it remains to be seen whether consumers will continue to freely buy Apple devices absent additional stimulus in the worst economy in many years.

Microsoft has seen strong demand for cloud services, productivity and collaboration software, and its Surface devices during the pandemic. But like all enterprise software companies, Microsoft is exposed to its customers tightening up their IT budgets due to economic uncertainty.

With valuations for Apple and Microsoft likely not reflecting these risks, both stocks were selling off on Friday. Apple stock was down 1.9% by early afternoon, while Microsoft stock had shed 1.4%.

A slowdown for Home Depot?

Like Apple and Microsoft, home improvement retailer Home Depot had done well during the pandemic. A combination of economic stimulus, less spending on categories like travel and restaurants, and people spending more time at home drove a huge increase in demand for home improvement products. In the second quarter, Home Depot reported comparable sales growth of 23.4%.

There's one big unknown: Did the pandemic create new demand? Or did it simply pull forward demand from the future? Analysts at Oppenheimer are worried about the latter scenario, downgrading Home Depot stock from "outperform" to "perform" on Friday. Oppenheimer believes investors are downplaying the chance that sales growth slows way down in a post-COVID-19 world.

Shares of Home Depot were down around 1.1% by early Friday afternoon. The stock has still climbed about 27% so far this year, but those gains could vanish if sales begin to disappoint investors.