Since the beginning of 2022, the tech-focused NASDAQ index has been up by about 20 percent. There are some good reasons and the innovation of companies like Alphabet, Apple and Amazon may be counted. Moreover, the huge success of Squid Game lately has reignited the interest in Netflix.
It is argued that higher interest rates may impede the growth of technology businesses and simultaneously lower the value of their cash flows in the future. The phenomenon has always been the attraction of tech shares.
Another reason is the resolve to curb Big Tech by the US lawmakers. Facebook is facing pressure for whistleblower allegations and it may create a new brand. Similarly, Amazon could be broken up.
According to Invesco chief global market strategist Kristina Hooper, the tech shares are good for long-term investment as the companies spend more on software to overcome the labor issues. The current labor shortage is believed to be a more permanent problem in the future.
The Nasdaq Composite closed down by 0.6 percent or 82.34 points at 14,015.67 on Monday and it is off 12.7 percent from November 19, 2021, a record close of 16,057.44. The S&P 500 closed lower by 0.4 percent of 16.66 points at 4,483.87 and it is off by 6.5 percent compared to the January 3 record close of 4,796.56. However, the Dow Jones Industrial Average closed higher at 35,091.13.
NASDAQ is an American stock exchange and globally ranked next to the New York Stock Exchange (NYSE) with respect to market capitalization. It is based in New York City and owned by Nasdaq, Inc. Founded in 1971, it was initially named the National Association of Securities Dealers Automated Quotations by the National Association of Securities Dealers (NASD), which is now named as the Financial Industry Regulatory Authority (FINRA).
It is the first electronic stock market in the world and was previously referred to as the over-the-counter (OTC) in media reports. It traded 37 percent of the US securities in 1981 and expanded to 46 percent by 1991. It joined the London Stock Exchange in 1992 and six years later it became the stock market to trade online. During the dot-com bubble, it attracted many companies.
NASDAQ Composite is the main index of the exchange and has been published since its inception of it. The other indexes include the large-cap NASDAQ-100 that was introduced in 1985 and the NASDAQ Financial-100 that tracks the 100 largest companies with respect to market capitalization.