The tech-laden Nasdaq was down almost 24% on Mar 23 from the beginning of the year when the coronavirus-induced selling peaked. After all, the pandemic weighed on corporate profits, disrupted supply chains and wreaked havoc on the economy.
But since then, the index kept climbing upward as investors bet on tech behemoths to ride out the economic upheaval.
The Nasdaq surpassed the broader S&P 500 and the Dow Jones Industrial Average through April’s market rally and erased its year-to-date losses in May. What’s more, the index briefly traded above the coveted milestone at 10,000 on Jun 9 for the first time ever on a day, after it notched its first record closing high since Feb 19, 2020. The index, in fact, touched the psychological milestone in less than 50 years.
The index also registered its fastest 1,000-point jump since the 49 trading sessions it took to soar from the 4,000 mark to 5,000 in the year 2000, according to Dow Jones Market Data.
Meanwhile, the Nasdaq-100 index that comprises the largest companies listed on Nasdaq in terms of market value also scaled northward, up 65.65 points, or 0.7%, to reach 9,967.17 on Jun 9. In fact, the largest names have played a pivotal role in lifting the Nasdaq to new highs.
Notably, the big five tech stocks, Alphabet, Facebook, Microsoft, Amazon and Apple, survived the pandemic-marred downturn and continued to surge on fresh investor optimism. Alphabet’s strengthening cloud unit is aiding substantial revenue growth, while Facebook benefitted from increase in mobile ad revenues and growing adoption of Stories by advertisers across Instagram.
Likewise, the new subscription model, Azure, and promising new products continue to generate sizeable cash flow for Microsoft. Amazon, in the meantime, is no doubt making the most from its Prime program. Apple too is benefitting from momentum in the Services business, strong adoption of Apple Pay and expanding Apple Music subscriber base.
It’s worth pointing out that the major tech indexes’ quick recovery has been fueled by the historic financial aid from the U.S. government and the Fed to combat the negative coronavirus impact on businesses and livelihood.
The government had approved more than a trillion-dollar relief plan that will directly benefit American consumers and business houses. The Fed, by the way, has trimmed borrowing costs and pumped billions of dollars into the banking system to sustain the credit flow. Policy makers unanimously agreed to trim benchmark federal funds rate a full percentage point to a range of zero to 0.25%.
The Fed is also willing to the expand the terms of its $600 billion yet-to-be implemented Main Street Lending Program to make it accessible to a greater number of struggling companies. Under the new rules, minimum loan amount will be lowered from $500,000 to $250,000, maximum loan amount will be increased to $300 million from $200 million and repayment period will get extended to five years from the earlier four-year period.
Sweep Up These 5 Tech Stocks Ready to Pop
With the big five tech stocks doing exceedingly well in trying times and the broader tech sector capitalizing on government and central bank aids, there is plenty of upside left for tech players and subsequently the Nasdaq.
Thus, investors who have failed to take advantage of the rebound in technology-related stocks shouldn’t be disheartened. We have highlighted five tech stocks that are poised to move north in the near future. These stocks possess a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Amkor Technology, Inc. AMKR is one of the largest providers of semiconductor packaging and test services. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 7.7% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 25% and 28.6%, respectively.
Acacia Communications, Inc. ACIA designs, develops, manufactures and markets communication equipment. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has risen 16.7% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 27.4% and 14.8%, respectively.
Etsy, Inc. ETSY offers e-commerce services. It provides online and offline marketplaces to buy and sell goods. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has climbed more than 100% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 38.2% and 49.5%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA Corporation NVDA NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has advanced 4.4% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 36.4% and 21.8%, respectively.
Magic Software Enterprises Ltd. MGIC develops, markets and supports software development. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved 1.6% north over the past 60 days. The company’s expected earnings growth rate for the current and next year is 12.1% and 6.2%, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Amkor Technology, Inc. (AMKR) : Free Stock Analysis Report
Etsy, Inc. (ETSY) : Free Stock Analysis Report
Magic Software Enterprises Ltd. (MGIC) : Free Stock Analysis Report
Acacia Communications, Inc. (ACIA) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research