Nasdaq is behind Dow for the fourth consecutive week, the longest streak since 2016

Investors are finally losing technology stocks after a decade of superior performance.

For the fourth consecutive week, the high-tech Nasdaq Composite fell behind the Dow Jones Industrial Average. It is the longest streak of its kind since April-May 2016, which was also the only year since 2011 when the Dow defeated the Nasdaq.

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

“It was years of frustration trying to get this deal right,” said Jack Ablin, who manages $ 12.5 billion as chief investment officer at Cresset.

Ablin said that this time it looks different. As of the fourth quarter, his company launched a new “quality dividend strategy”, transferring customers from the technology area to industrial, financial, material and energy companies. He was betting on a Democratic sweep in November, followed by a large stimulus package that would inject money into the economy, generating inflation and higher interest rates.

The 10-year Treasury reached its highest level in more than a year on Friday, reaching 1.642%. Rising rates give investors an incentive to direct money to fixed income, while inflation tends to have a disproportionate impact on growing companies because it lowers expectations for future earnings.

Meanwhile, the $ 1.9 trillion coronavirus relief package that President Joe Biden signed on Thursday will send direct payments of $ 1,400 to most Americans, and will also expand child tax credit and provide rent and assistance with public services.

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

“There is a pent-up demand to really go out and do things, take a vacation, go to bars and restaurants,” said Ablin. People are going to “take all that money outside and spend it,” he said.

While Biden and the Democratic Congress are focused on expanding green energy alternatives, the current outlook for travel and return to work is benefiting traditional oil and gas companies. Within the S&P 500, energy stocks are performing best this year, up 40% as a group. The best performing groups this week were stocks of consumer discretionary goods, real estate and public services.

Dow Industrials rose 4.1% on the week to close at a record 32,778.64. After three consecutive weeks of declines, the Nasdaq rose 3.1% to 13,319.87. Year-to-date, the Dow rose 7.1%, while the Nasdaq rose 3.4%.

Ablin knows that it is too early for a victory lap. Even with the low performance of technology in general, there is still a lot of money going for even more speculative assets. Bitcoin’s value nearly doubled this year, and on Wednesday, a non-fungible token (NFT) by artist Beeple was sold for more than $ 69 million at a Christie’s auction.

Ablin said he was asked about NFTs by a customer on Thursday. Although he admits he doesn’t have a strong point of view about them, he said that if the recipients of the stimulus money choose risky investments instead of traveling and buying consumer goods, the market could be very different in the coming months.

“If it is not really spent, but put on the market, that would take the rug out of our thesis,” said Ablin. For example, he said, “If, instead of taking a vacation, they bought Tesla shares.”

Tesla’s shares jumped 16% this week. But that was after dropping 30% in the previous month.

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