The Nasdaq The composite index contains more than 3,000,000 US stocks. It is home to many big technology giants including Microsoft And Apples, As with other innovative companies Tesla. It has performed remarkably well over the past year, beating many other stock indexes around the world. Nasdaq is up 31% compared to last year, but its worst day last month fell 2.8%.
Nasdaq is coming under pressure
Although volatility is expected to be greater in an index filled with tech stocks, yesterday’s drawdown was larger than in other stock markets. Here in the UK, for example, the FTSE 100 index was close to 0.5% and above the psychologically important 7,000 point level.
Yesterday the NASDAQ was significantly the main reason for the fall as investors were selling risky assets and looking for safe havens. At a very broad level, it involves selling stocks and transferring cash. But among the stocks, it specifically translated selling tech stocks. Tech stocks are seen as high-growth companies, but at the same time high-risk.
Why are investors worried? I think it’s just a continuation of the volatile situation we saw in the global market in early September. The main concern is the potential economic downturn in China, with concerns about rising inflation.
An additional factor in yesterday’s game was that we saw yields on 10-year U.S. Treasury bonds above 1.5%. Many investors use that particular yield as a barometer to indicate what the future interest rate might be. It is also negative for Nasdaq technical stocks which are full of debt. High interest rates in the future will make it more expensive for these companies to issue new.
Is the technology trend over?
Some have called the higher move of technology stocks in recent years a bubble. Others say it’s a trend. However you want to see it, it is definitely a part of the market that has made high incomes. The Nasdaq index has nearly tripled in five years.
I think it helps to keep in view yesterday’s move. If I were a long-term holder of a Nasdaq Tracker Fund, the 2.8% move would not be much higher than the profits already received in the previous month or years. It actually supports my investment mentality to ignore short-term measures as much as possible and look forward to years ahead.
Many large companies that dominate the index (think Apple, Amazon, Tesla) to have my opinion here. The managed business models are quite good and have proven over the years.
Therefore, although I think we see a continuing turmoil in Nasdaq in the coming days, I think the long-term trend is still high. If we see the index track low this week, I would consider buying a tracker fund next week.
jonathansmith1 has no position on any of the mentioned shares. John McKee, CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the board of motley flowers. Teresa Carsten, an employee of LinkedIn, a subsidiary of Microsoft, is a member of the board of The Motley Flower. Motley Full owns UK shares and has been recommended by Amazon, Apple, Microsoft and Tesla. Motley Flower UK recommends the following options: জান 1,920 calls to Amazon for long January 2022, $ 120 calls to Apple for long March 2023, 9 1,940 calls to Amazon in January 2022, and মার্চ 130 calls to Apple for short March 2023. The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.