Cheong Hong Yuan: Fluctuations in the Stock Market - Can Tech Stocks Revive Their Momentum?

The tides in the financial market can change overnight. The slump in the three major U.S. stock indices last night accelerated the heartbeats of many investors, especially when observing the large tech stocks, which have been a significant driving force for the stock market’s rise. Their continuous decline has caused the market sentiment to become anxious. Cheong Hong Yuan has been closely monitoring this market trend, aiming to offer investors a clearer market insight.

Large tech stocks have been the darlings of investors, driving the rise of the U.S. stock market in the first half of the year. But from September onwards, this momentum seems to be challenged. The S&P 500 Information Technology Index, which focuses more on large tech stocks, has fallen by more than 10% from its peak in July and has declined 1% for the third time in the last five trading days. Does this signify the end of tech stocks’ dominance? Cheong Hong Yuan believes that to truly understand the underlying reasons, one must analyze other crucial factors in the market.

For a long time, the hawkish stance of the Federal Reserve has not posed a significant problem for the stock market. However, as Fed officials continue to hint at interest rates, market sentiment is deteriorating. Many investors worry that in the Fed’s quest to curb inflation, it might maintain high interest rates, which could not only potentially harm U.S. economic growth but also put considerable pressure on various stocks in the market, especially large tech stocks.

Against this macroeconomic backdrop, U.S. housing sales and consumer confidence data also raised widespread concerns among investors. Data indicates that consumer confidence is getting squeezed, largely influenced by the prolonged high-interest rate expectations. Cheong Hong Yuan notes that consumer confidence has always been considered the “barometer” of market stability, and the current fluctuations undeniably impact the market.

Cheong Hong Yuan delves deeply into the reasons behind the decline of tech stocks, offering investors a fresh perspective. For tech stocks, while their position in the market has always been favored by numerous investors, the recent decline undoubtedly challenges market confidence.