The Nasdaq is recovering from yesterday’s spill.
Yesterday, the Nasdaq stock index, which is heavily reliant on the major tech stocks, experienced a heavy loss of around 2.4%. As a result of this loss, the index closed over 10% below its previous high set in February, and ended up in correction territory. The reason for this drop was a general loss in value of tech stocks. Prices have been rising on companies like Apple and Microsoft, which means their projections for future profits had to be lowered accordingly.
As the values dropped, however, investors stepped in to buy up the difference, prompting a re-rise this morning. Apple and Microsoft, alongside Amazon and Netflix, all managed to regain at least 3% in value, while Tesla, which suffered one of the biggest losses in a five-day period, jumped back up by 8.4%. As a result of these rebounds, the Nasdaq recovered 3.4% in value, while the Dow rose 0.7% and the S&P 500 gained 1.7%.
“A lot of these tech stocks have become oversold on a short-term basis. Therefore, it’s not a big surprise that they’re seeing a nice bounce,” said Miller Tabak chief market strategist Matt Maley. “The question will be whether this bounce is a strong one…or a ‘dead cat bounce’ that doesn’t last very long at all.”
The Nasdaq surges 2.7% at the open https://t.co/yl4IevlHVY pic.twitter.com/tNnbVGb5lj
— Bloomberg (@business) March 9, 2021
Tech stocks have been in a general decline for about a month now, with major pandemic-era investments like Zoom and Peloton losing an especially large 20% each. These losses are likely predicated on hopes for economic rebound as the latest COVID-19 stimulus package is confirmed and vaccines continue to proliferate.
“Right now the market is broadening out and we think in an underlying sense the bull market is strengthening and that will play to our benefit over the longer term,” Cathie Wood of Ark Investment Management told CNBC.