Over the past few days, the technology sector continues to dominate the increases in the stock market rally, with NASDAQ-100 Technology Sector gaining as much as ~4.20% over the week ended Friday (17 November 2023). Global stock market experts and analysts believe that technology sector has demonstrated strong performance in 2023, despite the US Federal Reserve’s decision of increase the interest rates. This year, S&P 500’s Technology Select Sector SPDR, saw a significant ~46.5% increase as of November 15, mainly because of investor enthusiasm for the overall hype about artificial intelligence (AI). While investors are now focusing on movement of markets in the next week, several analysts believe that the rally in the tech sector is likely to continue.
The US Federal Reserve’s campaign of tightening monetary policy has dampened the investors’ sentiments, however, the tech players continued to rise. The apex bank increased interest rates by total of ~525 basis points since March 2022. As the result, current benchmark interest rate in the range of 5.25%- 5.5%. Taking cues from the past records, such increases in the interest rates adversely impacts the growth momentum in sectors such as technology as a result of higher borrowing costs. However, technology stocks exhibited a surprising ability to revive back from the periodic dips. This resilience was highlighted by Nasdaq’s impressive climb of ~34.8% on year-over-year basis.
In the AI space, there is one more news which continues to make headlines. OpenAI removed Sam Altman on the afternoon of Friday, which raised numerous questions for the Microsoft and several other AI companies. However, on Saturday, OpenAI’s board was scrambling to bring the person back, as per the reports. With this big change, the focus in the next week should be on the technology stocks.
In the week gone by, the stock market rally was buoyed by tame inflation data and declining Treasury yields. Despite the major indexes pausing their rally in the later half of the week, the indexes didn’t quite go down. Even the increases were modest, overall the indexes remained green.
With traders and analysts thinking about the movement of markets in the next week, many believe that Nasdaq might enter a “Power trend.” Not only this, they believe that the index might enter as soon as Monday (20 November 2023). Just to let the readers know, power trends means times where investors and traders are required to be aggressive, but still they have to be disciplined about their investments.