The pullback in technology stocks has gathered momentum this week, with the Nasdaq Composite Index falling by 3.64% on Wednesday. Earnings disappointed, which saw a continued rotation out of technology stocks. As I write, the Nasdaq has now fallen by 3.5% over the last month, although it has still risen by 11.17% over the last 6 months.
There are a number of reasons behind this dynamic; short selling of technology stocks, recycling of capital due to high valuations and more attractive short-term valuations elsewhere, Trump and the upswell in support and softer economic data. Disappointing earnings across technology stocks also added to the weakening momentum.
The sell-off in technology stocks impacted most portfolios as the sell-off permeated across global stocks but, it is the stocks that have risen the strongest over recent months which have been hit the most.
This week’s agenda:
- Technology stocks lose value
- A wider sell-off
- We now have more choices on the menu
- How do we view technology stocks moving forward?
- Markets reassess the Trump trade
- The US economy grows better than expected
- Tax rises and the difficult choices
- Summary
Tech stocks lose value
On Wednesday we experienced the heaviest one-day drop in the Nasdaq since 2022. “It’s been a long time since investors experienced a shock like Wednesday,” said Mike Zigmont, Head of Trading at Harvest Volatility Management. “The perception that stocks only go up, with no risk, is invalidated again (source ft.com).
Continues…
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