Earlier this year, we posed the question on whether it would be “a bull or bear market for 2021?” (The Edge Singapore, Issue 971, Feb 15). Almost immediately after the article was published, the rally in global stocks was met with fresh volatility.
In the US, we saw a selloff in growth and tech stocks, which dampened sentiment around the world. The steep rise in US Treasury yields, from historic lows — on the back of rising inflationary expectations — hit valuations for high-growth stocks particularly hard. Investors rotated into reopening stocks, including financials and industrials as well as beleaguered travel-related airline and hotel stocks. The Nasdaq Composite fell sharply while the Dow Jones Industrial Average (DJIA) and, to a slightly lesser extent, the Standard & Poor’s 500 index held up far better.
Over the past week, we have been seeing yet another shift, back to Big Tech — and quite possibly the broader tech sector. Microsoft Corp, Alphabet (the parent of Google) and Facebook surged to alltime highs while Apple and Amazon.com rebounded smartly from recent lows. All three of the most closely watched bellwether US indices are now either near or at fresh record-high levels — proof that the “everything rally” remains alive and well.