Market Extra: Did the stock market peer through ‘rose-colored glasses’ as tech surged in July?

by | Aug 1, 2022 | Stock Market

Growth and technology-related stocks jumped in July, with investors now trying to discern what recessionary risks mean for their recent bear-market rally. “I don’t think there’s any all-clear on non-profitable tech from the conversations I have with investors,” said Eric Sheridan, senior equity research analyst covering the U.S. internet sector at Goldman Sachs Group, during an online press briefing Monday. Investors are still looking at large, “more mature” growth stocks in this environment, he said, whereas their interest level “really dies off” when it comes to newer companies without “free cash flow.”

The technology-heavy Nasdaq Composite surged 12.3% last month for its best July performance ever and its biggest monthly gain since April 2020, according to Dow Jones Market Data. Meanwhile, the Russell 1000 Growth Index
gained 11.9% last month, outperforming the Russell 1000 Value Index’s
6.5% rise, according to FactSet data. “People are flocking to tech based purely on where they anticipate Fed policy evolving between now and next year,” Danielle DiMartino Booth, chief executive of Quill Intelligence, told MarketWatch by phone late last week. “All you’re watching is herds in movement.” U.S. stocks rose last week after the Fed announced that it was hiking its benchmark interest rate by three-quarters of a percentage point in an effort to curb soaring inflation. The rally seemed linked to the assumption that a data-dependent central bank is moving t …

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