Global Macro: Strong Tech Stocks a Bullish Sign
High-beta companies found on the Nasdaq tend to lead the market higher when sentiment is elevated. The strength of tech stocks is a bullish sign that investors believe in the economy.
Last year, the prevailing thought was that stimulus cuts by the Federal Reserve would push equities lower. Instead, U.S. equities rallied in December when the Fed began to reduce its monthly bond purchases as investors took the the central bank's move as a sign that policymakers were confident in the direction of the U.S. economy.
But then anxiety over emerging markets because of the prospects of higher U.S. interest rates and slowing growth in China led to broad selling across global assets.There was widespread fear that economies in countries such as Turkey and India would crumble and their currencies would be devalued, but quick action from foreign central banks helped fend off the attacks. QQQ data by YCharts At the time of publication, the author had no position in any of the funds mentioned. Follow @macroinsights This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts