A Turbulent Year in the Tech World
With just a few remaining weeks on the year, the Nasdaq stands nearly even to where it closed last year, The tech-heavy index is down 0.2% for the year, well below the Dow Jones' 5.2% year-to-date gain. However, while the Nasdaq has effectively treaded water this year, its breakeven performance hides the wild market swings and turbulence that have defined the market.
Below is a graphic detailing some of the high, lows, and more notable events that defined the Nasdaq and broader tech sector this year:
After early gains in the year, the "turbulence" around tech stocks peaked in mid-summer. In August, the average trading day saw swings of 1.9% in either direction, the 10th most volatile trading month in the last 75 years.
That volatility and surrounding debate around the United States debt standoff led to a high level of uncertainty. In turn, that uncertainty led to companies crimping IT budgets. If sales forecasts for the coming quarters suddenly look in doubt, that large capital outlay to a company's IT department is one of the first areas to be cut.
So for a few tense summer and fall months, technology companies took one on the chin. However, with better visibility and business spending in technology quickly rebounding, the tech market has seen a healthy -- yet erratic -- recovery from the lows of the summer.
Tech companies continue posting record earnings, and business investment in technology equipment is at record levels. Even if the short-term forecast is continued turbulence, the long-term outlook on technology is surprisingly positive. Best of all for investors, all this at a time when P/E levels on leading firms are at record lows.
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At the time this article was published Dari FitzGerald owns shares of Amazon. Eric Bleeker owns shares of NVIDIA. The Motley Fool owns shares of Amazon.com, Microsoft, Apple, and Intel. The Fool owns shares of and has bought calls on Intel.Motley Fool newsletter serviceshave recommended buying shares of Amazon.com, Intel, NVIDIA, Microsoft, and Apple; writing puts in NVIDIA; and creating bull call spread positions in Microsoft, Intel and Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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