Ready for the Rest of the Market to Catch Up Amid Harsh Tech Sell-Off?
The rally in big-tech shares this year has been affected by the recent quarterly earnings reports as they have mostly failed to impress investors.
The $NASDAQ 100 Index(.NDX.US$ has fallen 11% from its July high, erasing about one-third of its AI-fueled advance, including two bruising days that lopped about $800 billion off share values.
Megacap tech stocks have also lost some of their luster as bond yields have climbed in recent weeks. The yield on the benchmark 10-year Treasury note, climbed above 5% intraday on Monday for the first time in 16 years.
The stronger-than-expected GDP figure suggested consumers are keeping the economy churning, supporting the view that the Federal Reserve will keep interest rates higher for longer.
For Kevin Gordon, senior investment strategist at Charles Schwab, the valuations gap between the biggest seven tech companies and the average stock in the $S&P 500 Index(.SPX.US$ made the current selloff inevitable. He sees further losses for big tech while the rest of the market catches up.
We're in a period of sector rotation, and people are trying to figure out in this new environment - in a full reset of rates across the curve - what are the stocks that are going to continue to do well and what are the stocks that are going to suffer," said Rick Meckler, partner at Cherry Lane Investments.
Given the current tech-sector focus, a sector rotation strategy may make sense for some investors. Historically, leadership among sectors changes over time due to various factors such as interest rates, economic cycles, consumer sentiment and more.
One example is found in utility stocks. The sector has not been a market favorite on a year-to-date basis. While the S&P 500 has risen by 7.75% during this period, the utilities has by far been one of the worst performing sectors in 2023.
But sectors that are underperforming the market one year have a tendency to lead the market when it recovers. The same will likely be true of the utility sector. Utilities enjoyed the largest gain in October, while semiconductors were the biggest loser.
Mooers, how low can Nasdaq 100 go? Are we getting to the bottom of the selloff?
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
Read more
Comment
Sign in to post a comment
Moomoo Official Account
Welcome to moomoo chat room.
6750Followers
3Following
10KVisitors
Follow