By Joseph Adinolfi
U.S. stocks are back in rally mode this week, but the main benchmarks are still sharply lower for the year, with the Nasdaq Composite down nearly 27%, making it the worst-hit among the main benchmarks.
While stocks fell more sharply during the aftermath of the Great Financial Crisis, the drawdown for tech stocks this year has been worse than anything investors have seen since the dot-com bubble burst more than 20 years ago by at least one measure.
Using the Invesco QQQ Trust Series ETF /zigman2/quotes/208575548/composite QQQ +0.07% as a benchmark, U.S.-traded tech stocks have fallen by two percentage points or more during more than one-fourth of the trading days so far this year. That’s the first time this has happened since 2002.
As the first half of the year comes to a close, investors will be keeping a close eye on expectations surrounding inflation, unemployment and economic growth as they try to gauge exactly how aggressive the Federal Reserve will be what’s expected to be the most strident quantitative tightening since the days of Paul Volcker, according to Capital Economics.
The end of the Fed’s zero-interest rate policy has hammered U.S. tech stocks. The Nasdaq’s losses are mild compared with the drop in the ARK Innovation ETF /zigman2/quotes/204808965/composite ARKK +1.41% , which is off more than 50% so far this year.
After wiping nearly two years of gains through the end of last week, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.14% has rallied sharply in recent days; it was up more than 6% so far this week as of noon Eastern Time on Friday.
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