2023-06-28 05:41:16
US technology stocks gain $ 1.9 trillion in months
US technology stocks rose at large rates in the first half of this year, benefiting from the crowding of investors to buy the assets of artificial intelligence companies, as this led to a rise in US stocks during the first half of the year, and accordingly the main index for measuring the Wall Street market S & P 500 gained 13 percent. %, and a measure of market volatility has fallen to depths not seen since before the start of the Covid-19 pandemic.
According to a report by the Wall Street Journal, yesterday, Tuesday, the index of market turmoil or the “Vix” investor fear index fell to about 14 points, near its lowest level since February 2020. It is an index that tracks options prices often used to hedge against stock market declines.
The boom in shares of artificial intelligence companies led to a staggering rise in the share prices of major technology companies, as the market value of the information technology sector increased by about $ 1.9 trillion since the beginning of the year to more than $ 10 trillion, which represents nearly half of the market growth this year, according to Market data from Dow Jones.
Bets on options on the technology-led rally have also extended to other corners of the market, such as small-cap stocks.
According to “Wall Street”, stocks began to move at a steady pace in the options market during the past months.
The resilience of the economy helped allay fears about the recession that prevailed for most of the past year, which led to a steady rise in the main indices. Instead of worrying about inflation and other economic data, investors have shifted their focus to individual companies.
Monthly inflation data, for example, which set off stock market fireworks last year, has led to relatively tepid reactions in recent months. The jobs data was also stronger than expected.
This has left many investors with more optimism about the economy and the markets. “The market is almost looking better for investors,” said Danny Kirsch, head of options at Piper Sandler.
Deutsche Bank’s research showed that it has now been more than three months since the S&P 500 fell by at least 3%, one of the longest stretches of decline since World War II.
The average weekly movement of the benchmark index was less than 1 percent. Analysts say technical dynamics in the stock and options market have pushed down volatility in the Vix.
Analysts believe that the US financial market may also be affected in its daily movements by a strategy to generate income, as investors sell future contracts in the options market, while giving buyers the right to buy shares at a specific price and on a specific date.
While the economic picture remained optimistic despite the wave of interest rate hikes by the Federal Reserve, some analysts say that the Fed’s policy has not yet put pressure on the economy as previously expected.
Investors in the Wall Street market will also take into account the trends in inflation rates in the second half of the year and whether the decline in consumer prices will continue.
Analysts say that the future of real interest rates will be among the directions of investors in the US bond market. It is not yet known whether interest rates on the dollar will remain at their current levels during the remainder of this year.
But it is certain that the geopolitical turmoil caused by the Wagner rebellion will prompt investors to buy dollar assets and hedge the Chinese market and markets linked to the future stability in Russia.
Investors are usually more sensitive to macroeconomic data and geopolitical turmoil, especially the strained relations between Washington and Beijing, the course of the Russian war in Ukraine, and the repercussions of the rebellion on the prospects for a peaceful settlement in the war.
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