Sales growth for companies on the Nasdaq over the past two decades has been exponential, far outpacing revenue increases for S&P 500 constituents, and the rate of U.S. GDP expansion. This underscores the evolution in the tech industry where changing lifestyles have led to innovation, and the pandemic is only quickening this shift.
That’s why this tech boom is different from the Internet bubble in early 2000 that saw a profit-less rally in the tech sector.It’s no coincidence the American technology market’s dominance took place under a low interest-rate environment that is essential for a sector that needs heavy R&D investments. The Fed’s pledge of low rates for longer will only help in that respect.
What’s more, an absence of clear haven bids for Treasuries such as we saw back in the March selloff is also indicative of a temporary pullback, rather than a more significant and lasting decline in tech stocks.
That’s why this tech boom is different from the Internet bubble in early 2000 that saw a profit-less rally in the tech sector.It’s no coincidence the American technology market’s dominance took place under a low interest-rate environment that is essential for a sector that needs heavy R&D investments. The Fed’s pledge of low rates for longer will only help in that respect.
What’s more, an absence of clear haven bids for Treasuries such as we saw back in the March selloff is also indicative of a temporary pullback, rather than a more significant and lasting decline in tech stocks.