The recent technology recovery seen at Nasdaq may be short-lived, according to Jeremy Siegel, professor of finance at the Wharton School, CNBC reported on Tuesday.
What happened: Siegel was less than optimistic about the high-tech index, which gained almost 3.7% on Tuesday, closing the best day since November.
Siegel associated higher interest rates and optimism with the reopenings that continue to hamper growth stocks, according to CNBC.
“I don’t think they are going to go wrong. We are not going to have a drop like the one 20 years ago, ”said the professor.
“But I think outperformers will be basically non-technical in the next six to 12 months.”
Technology stocks rose on Tuesday, with Tesla Inc (NASDAQ: TSLA) increased by almost 19.6% to $ 673.58 and gaining 2.32% in the after-hours session.
On Tuesday, the so-called FAANG shares composed of Facebook Inc (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Amazon.com, Inc (NASDAQ: AMZN), Netflix Inc (NASDAQ: NFLX) and Google, a subsidiary of Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) were all on the green.
Facebook shares jumped nearly 4.1% to $ 265.74, Apple shares rose 4.06% to $ 121.08, and Amazon shares rose 3.76% to $ 3,062 , 85.
Netflix shares closed up 2.66% to $ 506.44. Alphabet Class A and Class C shares rose 1.64% and 1.41% to $ 2,040.36 and $ 2,052.70, respectively.
Most of these actions were silenced in the after-hours session.
Why does it matter: The Nasdaq fell into correction territory this week, with the Nasdaq 100 falling 11% from a historical record set a month earlier.
Siegel noted that the upward march of long-term interest rates has not yet stopped, according to CNBC.
“The so-called value shares are going to be sought after for their yield because I think interest rates are still going to rise a lot here in the bond purchased,” said the analyst.
He predicted the Dow to reach 35,000 in 2021, a level almost 10% above Tuesday’s close.
Siegel remains optimistic, except in technology stocks, and said that this “stock market still has a way to go”, according to CNBC.
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