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Global markets cautious Rebound Recovering from the early August plunge – one asset manager said there is no need to worry about a prolonged downturn caused by the bursting of the tech bubble.
Technology stocks have been among the hardest hit in the recent sell-off, falling 1.6% in July. Wall Street’s tech-heavy Nasdaq 100 index has risen more than 4% since August. It has reignited debate about whether the industry is in a bubble. Waiting for the outbreak.
“I don’t see a tech bubble,” Manish Singh, chief investment officer at Crossbridge Capital, told CNBC’s “Squawk Box Europe” on Monday. “Yes, there are a few stocks that are doing well and they are doing well in terms of earnings.”
Singh used the Nasdaq as an example, noting that on an equal-weighted basis, where every stock has the same weight regardless of market capitalization, the index has been flat over the past three years.
“So if you have 100 stocks and seven of them are doing well because they’re profitable, that’s fine. There are 90 stocks that are not doing well, so I don’t think there’s reason to worry that you’re going to get into a bearish pattern where the market is overbought and so people are selling. I just don’t see that pattern,” he said.
The recent bull run in the tech sector has been driven in part by the so-called “Big Seven.” apple, Amazon, letter, Yuan, Microsoft, Nvidia and Tesla.
Mag 7 Index.
Singh said the wider S&P 500 It also doesn’t appear overbought, with annual growth of less than 4% over the past three years due to weakness in 2022 and 2023.
From a profit perspective, Microsoft’s performance Triggered a massive sell-off Before Semiconductor Company Stocks AMDResults Provoking a backlash Singh went on to stress that demand remains strong.
“It doesn’t say that the market has conviction in whatever direction it wants to go,” he said.
Volatility continues
While European, Asia-Pacific and U.S. stocks have recovered recent losses, market watchers agree that volatility is likely to persist.
“I do think that August will be a little bit more volatile because that’s the seasonal pattern… Last year was very similar and if you overlay this year’s chart with last year’s chart, we’re pretty much following the same pattern,” Singh said.
“It’s not dissimilar to what happens in U.S. election years, where there’s a seasonal swing around August and September, and once the election is over, the market starts to rally,” he said.
Matheus Dibo, managing director of the investment strategy group at Goldman Sachs Private Wealth Management, noted that last Monday’s surge in the Vix volatility index to an intraday high not seen since the 2008 financial crisis or the coronavirus pandemic, but he said the context was very different then.
He told CNBC on Monday that technical factors pushed the volatility index higher, while macro concerns and the unwinding of yen carry trades exacerbated the trend, causing stocks, bond yields and commodities to fall in unison.
“It’s hard to know if the worst is over … Volatility is likely to remain elevated for quite some time,” he said, citing the release of U.S. retail sales data, the consumer price index and the Federal Reserve’s meeting in Jackson Hole, which is expected to affect the market this month.
“But when you look at the underlying fundamentals of the U.S. economy, we think it’s still pretty solid,” he said.
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