Tech stocks were starting to climb out of their foxhole Thursday after surviving a two-day pounding that shook some of the biggest names on the Nasdaq.
Nearly $1 trillion in value got wiped out of the Nasdaq this week, according to Bloomberg, as a surge in U.S. bond yields rattled Wall Street.
In addition, minutes from the Federal Reserve’s December meeting released on Wednesday showed the central bank was getting ready to remove its economic help at a faster pace than expected.
Louis Navellier, founder of money manager Navellier & Associates, noted that market reacted swiftly to the news, with bond yields rising 10 basis points, compressing valuation multiples across the board, as the Nasdaq had its worst day in nearly a year.
"This appears to be an overreaction as so far there is no discussion of a possibly weaker economy because the 10-year US Treasury yield rises from 1.5% to possibly 2.0%," Navellier said. "In the big picture, this tightening cycle by the Fed was necessary, inflation needed to be addressed, and most of the damage occurring is in stocks which had very high valuation multiples."
The Nasdaq was moving higher on Thursday, but some of its best known names were still in the red, including Netflix (NFLX) - Get Netflix, Inc. Report, Tesla (TSLA) - Get Tesla Inc Report and Apple (AAPL) - Get Apple Inc. Report.
Meanwhile, companies like JD.com (JD) - Get JD.com Inc. Report. Peloton Interactive (PTON) - Get Peloton Interactive, Inc. Class A Report and CrowdStrike (CRWD) - Get CrowdStrike Holdings, Inc. Class A Report were rising.
Solita Marcelli, chief investment officer Americas, at UBS Global Wealth Management, said the sell-off did occur after a two-week rally during which the S&P 500 was up 5%, closing at an all-time high on Monday.
"The normalization of Fed policy shouldn’t dent the outlook for corporate profit growth, which remains on solid footing due to strong consumer spending, rising wages, and still-easy access to capital," she said. "Bear in mind that the Fed has become incrementally more hawkish since last summer and equity markets have performed quite well."