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Tech Stocks Bounce Back: Will the Rally Continue?

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Tech stocks recover after an awful December

December was horrible for technology stocks. The tech-rich NASDAQ Composite fell 9.5%, and as of December 24, the index had fallen ~23% since October 3. However, the index has since rebounded by 19.1%, demonstrating tech stocks’ resilience. The bounceback was driven by the tech sector’s earnings beating investors’ expectations, which were low due to worries of a global economic slowdown.

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What was behind the rally

The slowing Chinese economy affected Apple’s (AAPL) earnings, and NVIDIA (NVDA) cut its guidance, citing the slowdown in China.

However, the general sentiment has improved since December. Facebook (FB), Alphabet (GOOG), Netflix (NFLX), Amazon (AMZN), and Snap (SNAP), among others, saw healthy top-line growth.

Although the NASDAQ has recovered thanks to hopes of US-China trade negotiations and the Fed’s dovish stance, uncertainties regarding US-China trade and global economic growth remain, and tech sector valuation multiples have stayed high. After the dust from the earnings season settles, market volatility may resume.

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