Goldman downgrades tech stocks as Nasdaq falls
Both Goldman and BofA describe current situation as the "Time for Value"
The Nasdaq led the losses by Thursday afternoon trading, as tech stocks continued to weaken.
Although an increase in Covid-19 restrictions and President Xi Jinping’ s speech alluding to the integration of Hong Kong are thought to be driving down market sentiment, Goldman Sachs can also be said to have played a role.
In a report titled Time for Value, the investment firm downgraded its rating for the tech sector from Overweight to Neutral, stating:
“One of the most enduring features of the post-GFC period has been the secular outperformance of Growth vs. Value. There have been rotations, but these have generally been short-lived.”
The bank recognised “low rates, low inflation and low economic growth” and the “drivers of this long-term trend”, before adding:
“We think these drivers for the most part remain in place; the secular trends still favour growth or growth-defensive stocks (such as the GRANOLAS).”
Goldman’s cooling attitude towards general tech stocks is shared by the likes of Bank of America, which, curiously enough, published a report with the exact same title only two weeks ago.
Having recovered from March’s initial Covid-19 crash, the Nasdaq has almost recovered from the slump which followed the recent tech correction.
On the year-to-date, the tech-heavy index trades 29.5 per cent higher.
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