Following recent declines in the stock prices of some of the world’s largest technology companies, the Nasdaq 100 has rallied for the third day in a row. It is estimated that retail investors purchased an average of $1.2 billion per day this week, based on Vanda Research. These purchases have surpassed the daily average of $1.05 billion for the year 2021, which was previously established. According to analysts Ben Onatibia and Giacomo Pierantoni, the majority of the buying has been done by large technology companies and exchange-traded funds with significant positions in the industry. Garrett Melson, an expert in the field, predicts that technology companies will continue to attract investors because they can demonstrate their earnings potential.
Melson asserts that “people continue to underestimate how quickly they’ve grown in recent years.” Because of its long-term growth potential, technology is the primary driving force behind the market.
Higher Treasury yields have weighed on growth stocks, according to the most recent Bloomberg data, which shows that the five largest U.S. technology companies have lost nearly $900 billion in market value since the Nasdaq 100 reached its all-time high on September 7. After regaining its footing, the gauge had risen by nearly 3 percent in just three days. Thursday, the NYSE FANG+ Index, which includes companies like Amazon.com Inc. and Apple Inc., rose by 2.8 percent, according to preliminary data.
The Pandemic Effect
The stock market, according to some, will remain hostile towards the industry that has helped to fuel the stock market’s recovery since the peak of the pandemic. The recovery of the economy will lead to an increase in the number of traders looking for stocks that will benefit the most from a rebound in activity. Interest rates are expected to rise in the coming months as the Federal Reserve prepares to phase out its stimulus programs.
“We’ve had a long period of outperformance by megacaps, and I believe that period is coming to an end,” says Ryan Jacob, portfolio manager of the Jacob Internet Fund. Generally speaking, rates have declined over the last 11 or 12 years. Another factor contributing to their success is the fact that the environment appears to be changing.
According to Jacob, small- and mid-cap stocks will be better able to withstand higher interest rates as a result of their faster growth.