Nasdaq follows Dow for fourth consecutive week, longest series since 2016

Investors are finally turning out technology stocks after a decade of better performance.

For the fourth consecutive week, the technically heavy Nasdaq Composite followed the Dow Jones industrial average. This is the longest series since April-May 2016, which was also the only year since 2011 that the Dow beat the Nasdaq.

Market experts have been predicting a technological cooling for years and are consistently wrong, thanks to the increasing dominance of mega-cap companies like Apple and Amazon, the madness surrounding Tesla and the huge shift in spending on cloud computing.

“It has been years of frustration to get the trade right,” said Jack Ablin, who oversees $ 12.5 billion as chief investment officer at Cresset.

Ablin said this time feels different. As of the fourth quarter, his firm has implemented a new ‘quality dividend strategy’, moving customers from technology and into industrial, financial, materials and energy companies. He is betting on a democratic wave in November, followed by a major stimulus package that will pump money into the economy, leading to inflation and higher interest rates.

The Treasury for ten years rose to its highest level in more than a year on Friday, reaching 1.642%. Rising rates give investors an incentive to move money to fixed income, while inflation tends to have an excessive impact on growth companies as it dampens expectations for future profits.

Meanwhile, the $ 1.9 billion coronavirus relief package signed by President Joe Biden on Thursday will send $ 1,400 direct payments to most Americans, as well as increase child tax credit and provide rent and assistance.

Add to that Biden’s statement that all adults are eligible for a Covid-19 vaccine by May 1, and the economy looks set for a major setback in 2021.

“There’s a pent-up demand to really go out and do things, go on holiday, go to pubs and restaurants,” Ablin said. People are going to ‘take all the money along the sidelines and spend it’, he said.

Although Biden and the Democratic Congress are focused on expanding alternatives to green energy, the current prospects for travel and return work benefit traditional oil and gas companies. Within the S&P 500, energy supplies are performing the best this year, 40% higher than a group. The group that performed best this week were discretionary consumer stocks, real estate and utilities.

The Dow Industrials rose 4.1% for the week to a record 32,778.64. After three consecutive weeks of declines, the Nasdaq climbed 3.1% to 13,319.87. For the year, the Dow rose 7.1%, while the Nasdaq rose 3.4%.

Ablin knows it’s too soon for a win. Although technology is generally underperforming, there is still a lot of money going into even more speculative assets. Bitcoin almost doubled this year and on Wednesday sold a non-fungible token (NFT) by artist Beeple for more than $ 69 million in an auction by Christie’s.

Ablin said he had just been questioned by a client about NFTs on Thursday. While acknowledging that he does not have a strong position on it, he said that if the recipients of stimulus money opt for risky investments instead of traveling and buying consumer goods, the market could look very different in the coming months.

“If it really is not spent, but plowed into the market, it will pull the rug out from under our dissertation,” Ablin said. He said, for example, “If they don’t rather go on holiday, go buy Tesla shares.”

Tesla shares did rise 16% this week. But that was after 30% in the previous month.

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