Since the historical high point on July 10th, the market cap of companies in the Nasdaq 100 index has evaporated $2.6 trillion. Analyst Michael Hartnett of Bank of America believes that signs of an economic slowdown will put further pressure on technology stocks, but remains optimistic on the bond market for the second half of the year.
The US economy continues to slow down, which may further weaken the rally of technology stocks.
Recently, Bank of America analyst Michael Hartnett stated in the latest report that signs of economic slowdown will push investors to look beyond technology stocks and hold an optimistic view of the bond market in the second half of the year.
The report stated that recent data shows the global economy is in a "sickly" state and large technology stocks will gradually lose their dominance:
"We are only one bad non-farm payroll report away from losing the dominance of large technology stocks."
Against the backdrop of rising expectations for interest rate cuts and growing concerns about AI returns, funds have begun to shift from large technology stocks to small-cap stocks. Market data shows that since the historical high on July 10, the market value of companies in the Nasdaq 100 index has evaporated by $2.6 trillion.
However, the report states that the stock market bulls still believe that this pullback is "healthy" because the market has not yet fallen below a key resistance level - the Nasdaq 100 index has fallen by about 9% since July 10th, but it has still risen by more than 30% since its low point in October last year.
As of the week ending July 24th, the bull/bear indicator compiled by Bank of America rose slightly to 6.9, the highest level in more than three years. Generally, when the indicator rises to 8, it indicates that the stock market has "overheated" and triggers a "sell signal."
Hartnett stated that if fund managers increase their stock allocation, their cash level further decreases, and the rebound of lagging stocks leads to market breadth improvement, the signal will be triggered.