Nasdaq Bounces Back: Tech Stocks Lead the Way
Tech stocks rallied last Tuesday as the Nasdaq composite rose by 3.69% for its best day since November. The biggest winner was Tesla, soaring 19.6% after a five-day downward trend. Other leaders for the day were Zoom, Nvidia, and PayPal, with a 10%, 8%, and 7% rise, respectively. Amazon, Apple, and Facebook rose around 4%. Microsoft and Netflix followed suit with 2.5% gains.
The Dow Jones Industrial Average closed the day with a 30.30 point rise (amounting to 0.1%), while the S&P 500 rose by 1.4%.
The difference in performance between the Nasdaq and the Dow in previous sessions resulted from investors moving away from tech and towards cyclical stocks in expectation of a $1.9 trillion stimulus package and anticipated economic recovery.
A lot of popular tech stocks have seen double-digit drops in the last few months. Shares in Tesla, Apple, and Zoom Video decreased by 20%, 10%, and 20%, respectively.
Matt Maley, the chief market strategist at Miller Tabak, cautiously stated: “A lot of these tech stocks have become oversold on a short-term basis. Therefore, it’s not a big surprise that they’re seeing a nice bounce. The question will be whether this bounce is a strong one... or a ‘dead cat bounce’ that doesn’t last very long at all.”
Some believe that the tech sector is set to maintain an upward trend long term. “Extremely strong returns are quite common, meaning this 10% correction could end up being a nice buying opportunity for those willing to make the uncomfortable trade,” said LPL’s Ryan Detrick on Twitter.
However, experts agree that a better investment would be cyclical stocks with the $1.9 trillion fiscal stimulus, while tech stocks remain a great long-term prospect.
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