Ants Buy Tech Stocks Again... Nasdaq Up 12% in July on Bargain Hunting

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Individual investors are flocking back to tech stocks. Investors who had been waiting for a low-price buying opportunity amid the tech stocks’ collapse due to the US-driven tightening this year have started betting, buoyed by the “stock market bottom theory.” The Nasdaq index, which is centered on tech stocks, surged more than 12% in July alone.

The Wall Street Journal (WSJ), a leading US economic daily, reported on the 31st of last month (local time), citing data from Vanda Research, that the scale of individual investors’ purchases of a popular tech stock basket reached the highest level since 2014 at the end of July. This basket includes FAANG (Facebook’s parent company Meta Platforms, Apple, Amazon, Netflix, Google Alphabet), as well as Tesla and Microsoft (MS). Apple, AMD, and the tech-focused Invesco QQQ Trust ETF were also among the most popular investment targets for individual investors.

These tech stocks have struggled this year. Soaring inflation heightened the Federal Reserve’s (Fed) tightening concerns, causing interest rate-sensitive tech stocks to plunge. Following the giant step (0.75 percentage point rate hike), the Nasdaq index fell below the 10,000-point level in mid-June, more than 33% down from its previous peak.

However, as the stock market bottom theory spread in July, signs of a rebound in tech stocks began to emerge. The Nasdaq’s 12.3% gain in July was the largest monthly increase since November 2020. It outpaced the Dow Jones Industrial Average (+6.7%) and the S&P 500 (+9.1%). Although still in a bear market more than 20% below its peak, expectations have risen that tech stocks, which had experienced significant declines, will benefit greatly if the market bottoms out and rebounds.

By individual stocks, Amazon’s share price soared 27.06% in July. Apple rose 18.24%, and Alphabet, Google’s parent company, increased by 6.75%. Netflix, which suffered particularly heavy damage among tech stocks at the beginning of the year, rebounded by a remarkable 28.61%. Among FAANG stocks, all showed upward trends except Meta Platforms, which faced the adverse event of its first-ever revenue decline. Tesla, which had fallen below the $700 per share mark, is now close to recovering to the $900 level within a month.

This is analyzed as a result of the easing of the tightening fears that had weighed on the market. The judgment that monetary tightening has peaked following consecutive rate hikes has spread. Major investment banks such as UBS, Jefferies, and Bank of America (BoA) expect the Fed to begin slowing the pace of rate hikes starting in September.

Additionally, solid second-quarter earnings from representative tech stocks like Apple and Amazon, which exceeded market expectations despite the unstable macroeconomic environment, also acted as a positive factor for tech stocks overall. WSJ evaluated, “Although tech stocks such as Amazon and Alphabet have experienced double-digit declines this year, they remain the most popular stocks among individual investors,” adding, “These companies are expected to rebound and continue to support the economy.”

In South Korea, Cathie Wood, CEO of ARK Investment and well known as “Donnamu Unni,” recently said in an interview with CNBC, “The bear market is coming to an end,” and predicted that growth stocks, including tech stocks, will lead the US stock market going forward. Tom Lee, a representative bull on Wall Street, also reaffirmed the optimism on tech stocks including FAANG on the same day, saying, “The market has bottomed,” and forecasted a rebound by the end of the year.

This content was produced with the assistance of AI translation services.