The week ahead on Wall Street: Big US tech stocks may continue to rally

The week ahead on Wall Street: Big US tech stocks may continue to rally

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Big boom in America Tech Stocks Maybe now there is a sense of relief, which brings hope market segments which have been more subdued this year.
Although the S&P 500 has gained 14.6% this year, most of the broad index's gains have been concentrated in the information technology and communications sectors — up 28.2% and 24.3%, respectively. The rest of the market has been in the doldrums: The next-best performing sector, utilities, has risen just 9.5% year-to-date.
Many investors believe that the long-term case Technique The massive surge in the stock price is solid, given their strong earnings and excitement over the revolutionary potential of artificial intelligence. But the massive price increase, which includes Nvidia Corp.'s 155% rise so far this year has raised concerns that the tech rally may be too intense.
Market laggard companies such as small caps and so-called Value Stocks Such financial and industrial sectors may look like a cheap deal.
“Nvidia has been a rocket ship, and when things go up that quickly you don't want to be the last one out the exit door,” said Michael Purves, CEO of Tallabacken Capital Advisors. “People want to invest in this equity rally, and if they sell Nvidia they are most likely going to be looking for value and Cyclical Stocks,
a rotation out Big Tech Concentration concerns may be alleviated by the market rally in recent weeks Once again, the gains have come down to just a few names. Nearly 60% of the S&P 500's total return of more than 14% for the year has been driven by five companies whose stocks have the heaviest weighting in the index: Nvidia, Microsoft, Meta Platform, Alphabet and, data from S&P Dow Jones Indices showed.
Last week showed some signs that big tech companies are getting tired. Nvidia shares are down 10% from their peak on Thursday, pushing the chipmaker out of its short-lived spot as the world's most valuable company. Nvidia is headed for a 4% drop for the week, while the S&P 500 is headed for a gain of less than 1%.
Closely watched economic data in the coming week, including inflation data on Friday, could also weigh on investor sentiment. market participants To find out whether the slowdown in inflation is continuing or not.
Tech is overextended based on a number of barometers, Parves said. He added that the Mag6 Index’s relative strength indicator, which measures the speed and magnitude of price changes in the stock market’s six largest stocks, is at an all-time high.
Meanwhile, the price ratio between the Nasdaq 100 and the S&P 500 Equal Weight Index (which is a proxy for the average stock) has risen 9% since the beginning of June, he said. In contrast, the S&P 500 is up about 4% this month.
Optimism is high among retail and institutional investors, which some see as a contrarian indicator because it means the bar for a positive surprise is high. The AAII sentiment survey held steady at 44% in the week ended June 19, about 8 percentage points above its historical average. Sentiment among fund managers in the latest survey from BofA Global Research was at its highest since late 2021, with investors cutting cash positions and increasing equity allocations.
Larry Tantarelli, chief technical strategist at Blue Chip Daily Trend Report, said the VanEck Semiconductor ETF's 13% gain since the beginning of the month is a sign that AI fever may have gone too far.
“In the near future you may see a decline in technology and semi-industries, and a healthy recovery in other parts of the market, which will continue this bull market.”
Even if there is a correction, there is little sign that investors will abandon tech and growth stocks for long. Betting against tech has been a losing proposition over the past decade, as the Nasdaq 100 Index has risen more than 400%, while the Russell 1000 Value is up about 70% during the same time period.
The Russell Value Index is up 5.6% this year. Investors have given it an even cooler reception small cap stocksThe Russell 1000 has declined 0.5% so far this year.
The tech sector may rebound too quickly as investors rush to buy on dips. The Nasdaq 100 took five weeks to hit new highs after falling as much as 9% in April.
“I don't think investors are going to want to hit the register and book profits on this one,” said Jason Alonzo, portfolio manager at Harbor Capital Advisors. “If anything, I'm seeing people who feel like they missed out on trying to get in on this trend.”

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