Wall Street started the new year on a pessimistic note, having shed 12%. However, it slightly recovered following an increase in the Big tech stocks. The NASDAQ Composite also managed to recoup some of its early losses.
In late January, the NASDAQ notched the worst performance in the entire history. In the period from January 1 to January 28, the index crashed to 13,770 from 15,645. This was even a bigger drop compared to one which occurred in 2008 in times of the global financial crisis. At that time, the index fell by 10%. Analysts assume that a slump in the IT sector was triggered by expectations of rate hikes by the Fed. Currently, investors are getting rid of the potentially risky shares. They are shifting their attention to government bonds. Their yield is climbing amid expectations of monetary policy tightening. Morgan Stanley analyst Michael Wilson argues that stocks may hit new lows as bears are likely to take control again.
However, the likelihood of a long-term decline in the stock market is still low. The index was able to revive. Analysts at Bloomberg believe that upbeat earnings reports of tech companies eclipsed rate hikes fears. For example, Apple reported record revenue. In the first quarter of 2022, it advanced by 11% on an annual basis.
