(Bloomberg) — The Nasdaq Composite Index is headed for the worst start to a year in half-a-century of its existence after the Federal Reserve’s aggressive rate hike plans roiled high-flying technology stocks.
The tech-heavy index was down 12% in January as of Friday’s close, worse than the 10% drop in 2008 when the global financial crisis rocked markets worldwide. The selloff comes on the back of a surge in U.S. Treasury yields, hurting pricier tech stocks that are valued on future growth expectations.
Futures tracking the elite Nasdaq 100 Index — an indication of what’s to come at open on the last day of the month — showed a 0.7% rise, extending their rebound from Friday as earnings beats helped somewhat lessen the Fed blow. But even if the Composite index rises by 1%, it would still be on track for the grim milestone.
And strategists say it might be too soon to say the worst is over. For Morgan Stanley’s Michael Wilson, the volatility and intraday swings resemble “classic bear market action.” Indeed, gyrations in futures contracts were a common sight last week with four-plus percentage point moves on average as nervous growth-stock investors hunted for the bottom after one of the most brutal selloffs since March 2020.
What’s more, Bank of America Corp. highlighted on Friday that 2,648 out of 3,682 Nasdaq stocks were now in a bear market and nearly half of them were down more than 50% from their 52-week highs.
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Nasdaq Index Poised for the Worst January in Its 50-Year Existence
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