Big Tech Rally Continues as Earnings Boost Investor Confidence

Big tech’s mojo doesn’t appear to be fading as a recent spate of earnings reports are giving investors reason to be confident. The Nasdaq 100 is up over 20% this year compared to the S&P 500’s 8.6% gain.

It appears that big tech is sloughing off the post-pandemic effects that saw a drop in valuations in 2022, which led to cost-cutting measures such as mass layoffs. In the macroeconomic backdrop, the hope is that dissipating inflation and a slower pace of rate hikes will continue to brighten forecasts through the end of 2023 and into 2024.

Companies like Amazon, Alphabet, Microsoft, and Apple have been seeing their shares rise as of late amid the positivism that’s creeping back into big tech. In the meantime, the positive data is showing up in the bottom line for these companies.

“Digital ad spending is stabilizing, for instance, and laptop buying is showing modest signs of life,” a Wall Street Journal report noted. “The big tech companies that reported results this past week added a combined $320 billion in market valuation after posting their figures, according to FactSet and Dow Jones Market Data.”

It’s certainly helping bullish big tech investors who suffered through the pain of 2022. Big tech’s rally is also having an overall positive effect on the broader market.

“The market was waiting with bated breath for Big Tech,” said Quincy Krosby, chief global strategist at LPL Financial. “Across the board, it hasn’t disappointed, and the market needed that.”^NDX Chart

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Big tech’s earnings report were a much-needed boost for the markets given the recent weakness surrounding the fragility of the financial system amid bank rescues. While big tech’s rally won’t completely quiet the concerns surrounding a recession, it will at least help to quiet down some of that market noise.

“An odd thing happened on the way to recession: Consumers kept spending, even beyond corporate executives’ hopes, and Big Tech reignited faith in earnings beating Wall Street’s expectations,” a Bloomberg report said.^NDX Chart

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