The Nasdaq Composite Index, which is made up of more than 3,000 tech stocks, hit a new all-time high on Tuesday. The tech sector has been one of the strongest performers this year, with the index up more than 14%. What’s behind the rally in tech stocks?
Some investors are betting that the Trump administration will be more business-friendly and roll back regulations that have hurt the sector.
Others believe that the growth in technology companies is sustainable and that they will continue to outperform the broader market. Technology stocks have also been benefiting from a rotation out of bonds and into equities.
Bond prices have been falling as interest rates rise, and investors are looking for higher returns in stocks. The technology sector is seen as relatively safe and has low volatility, making it an attractive investment for risk-averse investors.
The tech stock rally that began in early 2016 continued into 2017 with the NASDAQ 100 Index up almost 20% year-to-date. What’s behind the rally?
A number of factors are driving the rally, including strong earnings growth, low-interest rates, and optimism around President Trump’s pro-business policies.
Another key driver is the global economy, which is finally starting to improve after a number of years of sluggish growth. This has helped to boost demand for technology products and services.
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As investors become more confident in the outlook for technology stocks, they are bidding up prices to levels that may not be justified by current fundamentals. This could lead to a correction in the market at some point in the future.
Here are the three secrets behind the tech stocks rally:
1. Growth In Technology Sector
The technology sector is driving the current stock market rally. The sector has been outperforming the broader market, and this trend is likely to continue.
Technology stocks are benefiting from strong growth in the global economy and from rising demand for new technologies.
The technology sector is expected to generate strong earnings growth in 2022. Companies in the sector are benefiting from rising sales of smartphones, tablets, and other digital devices.
They are also benefiting from the rising demand for cloud-based services and other new technologies. The technology sector is likely to continue to outperform the broader market in 2022.
Technology stocks are attractively valued relative to other sectors, and they offer good prospects for future growth. Investors should consider adding exposure to the technology sector to their portfolios.
2. Stocks Benefiting From The Growth
The growth of the internet and technological advancements have benefited many technology stocks. Companies like Amazon, Facebook, and Google have seen their stock prices soar as a result of their growing businesses.
These companies have been able to disrupt traditional industries with their innovative products and services. Investors continue to invest in these stocks due to their potential for future growth.
3. International Growth
Investors have been piling into technology stocks in recent months, betting that the sector’s strong international growth will continue to drive profits higher.
The technology-heavy Nasdaq Composite Index is up nearly 10 percent so far this year, well ahead of the broader stock market.
Technology companies are benefiting from robust sales growth in overseas markets.
Many of these firms get a significant chunk of their revenue from outside the United States, and they are seeing strong demand in faster-growing economies such as China and India.
Apple, for example, reported that its sales in Greater China were up 33 percent in its most recent quarter.
The company’s iPhone is especially popular in China, and it has been investing heavily to expand its presence in the country. Other big tech firms are also seeing healthy sales growth overseas.
Since the early 2010s, there has been incredible growth in the tech sector of the stock market.
Fueling much of this rally has been rising valuations for technology stocks. Compared to other industries, technology stocks are seen as a high-growth investment with big potential returns.
Investors appear to be betting on the future of the tech sector, as many companies within this industry are expected to grow at a rapid pace. This is thanks to continued advancements in technology and the ever-growing demand for new and innovative products.
Despite concerns over a potential stock market correction, investors remain bullish on tech stocks.
And with good reason – these businesses continue to generate impressive profits and offer great opportunities for future growth.
As long as the fundamentals remain strong, it’s likely that the tech stock rally will continue.
There are many factors that have contributed to the rally in tech stocks. These include strong earnings growth, low-interest rates, and optimism about the future of the economy.
While there may be some concerns about high valuations and a potential bubble, most analysts believe that the rally will continue for the foreseeable future.
Investors should continue to watch these stocks closely and consider adding them to their portfolios.