Exchange-traded funds tracking U.S. equity benchmarks have highlighted a split in the market created by struggling technology stocks, with the Nasdaq at a potential inflection point relative to the S&P 500 index, according to Bespoke Investment Group. The tech-heavy Invesco QQQ Trust
which tracks the Nasdaq 100, is the only major U.S. index ETF that remains “meaningfully” below its 50-day moving average, Bespoke said in an emailed note Wednesday. “After giving up all of its post-COVID outperformance versus the S&P 500, the Nasdaq’s decade+ uptrend in relative strength appears to be at a key inflection point.”
The U.S. stock market has tumbled in 2022 as the Federal Reserve hiked interest rates to combat high inflation. Growth and technology stocks have been particularly hurt by the increases. Trading over the past five days has been “somewhat of a microcosm of the trend” seen this year in the performance of U.S. equity indexes, according to the note. So far this year, “QQQ is easily the worst performer of the major index ETFs with a drop of 30.5%,” the firm said. Invesco’s Nasdaq-100 ETF (QQQ) is down 3.2% over the last week, while the S&P 500 is “flat” and indexes such as the Dow Jones Industrial Average
the S&P MidCap 400, and the small-cap-focused Russell 2000 are all up more than 2%, according to the note.