A rally in risk assets this week is sending traders to some of the most speculative corners of the technology sector, where gains in beleaguered stocks are more than double those of Nasdaq 100’s advance.
Shares in e-signature company DocuSign Inc., cybersecurity software maker Okta Inc. and Atlassian Corp. have jumped 19%, 15% and 14% respectively as a four-day rally in the Nasdaq 100 gains momentum. The tech-heavy index is up 5% this week, on track for its longest stretch of gains since March.
While most of the gains in the Nasdaq and other broad indexes is coming from tech stalwarts such as Apple Inc., Amazon Inc. and Microsoft Inc., higher demand for companies with lower profitability and higher valuations, indicates investors’ willingness to embrace more risk.
For now, at least.
This week’s rally has occurred amid a drop in US Treasury yields, whose rapid rise this year has made the technology sector one of the worst performing in the stock market.
The selloff has weighed most heavily on the shares of companies such as Netflix Inc. and software maker Zscaler Inc., which are down 69% and 48% so far in 2022. Overall, a group of unprofitable tech companies tracked by Goldman Sachs is down more than 40% this year, compared with 26% drop for the Nasdaq 100.
