These Investors Say Nasdaq’s Bear Market Has Legs

The drubbing global technology stocks have seen this year may be far from over.

That’s the message from many strategists and fund managers, who expect this year’s rout to deepen in the near term as the Federal Reserve aggressively tightens monetary policy to fight inflation, raising the specter of a recession.

Even as a potential economic contraction looms, analysts are still predicting that earnings growth for tech companies will accelerate late this year and in 2023. Investors are overweight the sector in their portfolios and expect to profit by buying when prices dip, according to Bank of America Corp.’s quantitative strategists. Until that optimism fades, tech stocks won’t find a bottom, the firm says.

Last week’s swift rebound isn’t convincing the skeptics. The Nasdaq 100 Index gained 7.2%, snapping seven weeks of losses. Still, the tech-heavy benchmark is on pace to close in the red this month.

“While the rebound feels good it is not unusual to have bear market rallies,” said Peter Garnry, head of equity strategy at Saxo Bank. “Investors should not forget that the underlying commodity and supply chain dynamics will continue to underpin pressures on inflation and interest rates.”