For the first time in three+ years, the Nasdaq 100 Index soared into a fresh bull market on Wednesday. The investors flocked to technology stocks, and anxiety over the recent bank instability subsided. Both these positive cues helped traders and investors put their faith in the market.
The tech-heavy barometer saw its final trading session close more than 20% higher than its closing low on December 28. It is due to significant rallies in the mega caps Apple Inc., Microsoft Corp., and Amazon.com Inc.
After several failed attempts to accomplish so last week and early February, it eventually scrambled above the crucial level. After significantly recovering from its Covid lows in March 2020, the Nasdaq 100 last entered a bull market in April 2020.
Better Performance of Technology Stock
This year, technology stocks have performed better than average. It is due to investor speculation that the Federal Reserve may cease rising interest rates sooner than anticipated. It is because of recent bank stress, poor economic statistics, and the possibility of a recession. With steep financial drops, investors have adopted the sector as a sanctuary.
According to Chris Larkin, managing director of trading and investing at E*Trade Financial Corp., just like growth and tech stocks continued to suffer the past year as the Fed toughened rates at an unprecedented pace. It’s not surprising that they’re going to rebound in addition to the broad market as people begin to see the light at the rate-hike tunnel’s end.
17% Index Gain
After two weeks of advances, the Nasdaq 100 advanced on Wednesday. The index has gained more than 17% since losing over a third of its value in 2022.
Last Wednesday, the Fed increased its benchmark overnight rate by 25 basis points while softening the tone of its policy statement by stating that “some” increases, rather than “ongoing,” were required to control inflation.
Although the Fed was less hawkish on Wednesday than many market observers had anticipated, Chairman Powell clarified that the board does not intend to decrease rates this year, according to Larkin. In addition, he said that investors must be believable about the potential of more fluctuation on the immediate horizon. In particular instances, stock indexes may be vulnerable to underachieving in the market, as they frequently do when perception turns negative. The bear market, he continued, “may be nearer to its end than its outset.
