After the Crash — How to Buy Tech Stocks as Rates Begin to Rise?
Tech stocks finally showed a little fight last week, aided by an impressive batch of earnings reports. But the sector remains battered. The Nasdaq Composite is down 16% over the past two months—and beneath the surface, the damage is considerably worse. Among Nasdaq stocks with market caps over $1 billion, one-quarter are down 30% or more since mid-November. More than 60 Nasdaq stocks are down 50%-plus, including familiar names like Overstock, Affirm, Robinhood, DocuSign, and Etsy.
While stock prices are a lot lower, they are hardly de-risked. As the Federal Reserve made clear last week, rate increases are coming, likely by March. Higher rates are bad for the kind of high-multiple growth stocks that led the market over the past two years.
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