Since the last Nasdaq 100 index hit a record high on July 10th, it has fallen nearly 9% cumulatively until now; However, there is still a growth of more than 30% compared to the low point of the stage in October last year; Harnett believes that if the US economy shows a trend of slowing down next, the cohesion of US tech giants will show further looseness.
On Friday, the pre-market trading of US stocks indicated that the Nasdaq, which had fallen for three consecutive days, is expected to breathe a sigh of relief on the last trading day of this week. However, the latest strategy report from Bank of America points out that there is a possibility of further disintegration of the alliance of US tech giants.
Michael Hartnett, Chief Investment Strategy Officer of Bank of America, stated in Friday's report that recent data indicates that the global economy has been "ill", and we are only one "bad employment report" away from the loss of dominance of US large tech stocks.
Since the last record high of the Nasdaq 100 index on July 10th this year, the decline has exceeded 9%, and the market value of 2.6 trillion US dollars has evaporated. In addition to the pressure of taking profit, capital markets have also had doubts about the short-term return of madly investing in AI by large companies in recent days.
This report coincides with the release of US Q2 GDP data yesterday. Although the annualized quarterly growth rate of 2.8% has doubled from the previous quarter, and the year-on-year data continues to maintain around 3%, Harnett's focus is on the trend of economic growth slowing down.
In the latest outlook for the global economy released by the IMF in July this year, the GDP growth rate of the United States in 2024 was slightly lowered to 2.6%, and the growth rate in 2025 will further slow down to 1.9%.
Also according to previous reports from Cailian Press, the Fed's Beige Book released last week revealed that more and more regional economies in the United States are entering a state of "stability or decline". In the face of uncertainties such as elections and inflation, expectations of future economy by US consumers and enterprises are slowing down in the next six months, and phenomena such as consumption downgrading are becoming more common.
Harnett said that as the trend of US economic growth continues to cool, there is a risk that the rising momentum of these large-cap tech stocks will be further weakened. This analyst who is bullish on the trend of bond market in the second half of the year also predicted that funds will flow into stocks with rising momentum that are not as good as tech giants in this situation.
Harnett also pointed out that many market bulls still insist that the recent "correction" is healthy, even if the Nasdaq 100 index has fallen nearly 10% in the past half month, and there is still a growth of more than 30% compared to the low point of the stage in October last year.
Bank of America's custom "Bull & Bear Indicator" rose to its highest level in nearly three years during the week ending July 24. Harnett said that as fund managers increase their stock allocation, cash levels will further decrease, and those stocks with lagging performance will set off a wave of gains, this indicator may rise further, and touch a reverse sell signal.
Editor/Lambor