[ad_1]
By Emily Barry
The last time the Nasdaq was up this much in the first month of the year was 2001, and that year didn’t end well for tech stocks. The phrase ‘dot-com bust’ might ring a bell.
In the year Tech stocks are on a tear to start 2023, but that could actually be an ominous sign.
The Nasdaq composite index is up 11 percent so far this month, since posting a 12.2 percent gain in 2001. But that 2001 rally continued to cool sharply: the Nasdaq fell 29.7% for the rest of the year.
In the year If you don’t remember what happened in 2001, it was known as the dot-com cracker. After many years of optimism on the path of technology that took the stock market to new highs in 2000, the bottom fell out, and despite many changes as of January 2001, the overall market has not seen a downward trend since the bursting of the tech bubble. By the end of 2002, a complete turnaround.
In the year The structure remains the same this year as tech stocks tumbled from record highs in 2022 amid a wave of optimism about the direction of young public tech companies. The Nasdaq had its fourth-worst year on record, and worst since 2008.
Of course, previous periods where the Nasdaq gained more than 10% in the first month of the year fared better. The average performance of the index under such conditions showed a 14.1% gain for the rest of the year.
According to Dow Jones Market Data, the Nasdaq is seeing its best monthly performance since July 2022, and is on pace to record its seventh best in January.
The S&P 500’s communications services sector, Meta Platforms Inc. (META), Netflix Inc. ( NFLX ) and several large telecommunications stocks, set for a fourth straight week of gains. This marks the longest winning streak since October 2020. It’s up 14.8% this month and on track for its best month since October 2002, along with January’s record high.
The rally in tech comes even as several big names issue dire warnings. Microsoft Corp. ( MSFT ) saw its cloud business slow last quarter and expects further slowdowns, a forecast that suggests the rest of the cloud industry could be in for more pain as well. And Intel Corporation’s ( INTC ) business continues to falter, partly due to industry-wide challenges and partly through its own fault.
Comment: Intel has had its worst year since the dotcom bust, and it won’t get any better anytime soon
Tech companies are currently making layoffs and other cost cuts while giving investors what they seem to want. But it remains to be seen whether the latest wave of job cuts will have much of a financial impact, given the massive hiring spree that took place during the pandemic. Alphabet Inc.’s ( GOOGL ) ( GOOGL ) 12,000 planned layoffs won’t even dwarf the number of hires the company made in the third quarter alone, and the billionaire is scrambling to hire more.
The outlook could become clearer next week when some of the world’s biggest tech companies report holiday earnings and forecasts for the year ahead. In addition to Facebook parent meta and Google parent letters, results from Amazon.com Inc. (AMZN) Expected — This Year’s Earnings May Determine the Rise for the S&P 500 Index — Apple Inc. (AAPL) and Intel rival Advanced Micro Devices Inc. (AMD).
– Emily Barry
(END) Dow Jones Newswires
01-30-23 0833ET
Copyright (c) 2023 Dow Jones & Company, Inc.
[ad_2]
Source link