The stunning rally in US tech stocks shows investors are betting on a"win-win" outcome – where the sector does relatively well regardless of what happens in the wider economy, according to markets guru Jeremy Siegel.
"Tech investors – it's a win-win for them," Siegel said."They say, listen, it's a long-end asset – if we have a recession, you know, tech is mostly immune. And, if we have a recession, the Fed will stop raising interest rates, maybe lower interest rates - that's really good for the long-lived assets that we have."
Tech companies have led an impressive rally in US equities this year, buoyed by bets that the Fed is close to ending its interest-rate increases, as well as investor excitement over the rise of artificial intelligence. The tech-heavy Nasdaq 100 index has jumped 39% in 2023, buoyed by triple-digit gains in names such as Nvidia, Meta Platforms and Tesla.
Usually, it takes a couple of pieces of disappointing economic or corporate news to break a rally, but there hasn't been any so far – so it's probably best to play along with the market, Siegel suggested.Fed's 'war on growth'