To The Moon

It’s been a very rough month for riskier assets, but technology stocks seem to be doing just fine. The Nasdaq 100’s 5.7% gain in March stands out against the S&P 500’s 0.5% retreat and the considerably deeper declines across many major markets. The longtime playbook of “lower yields = higher tech stocks” still looks to be the one many investors are committed to. After all, for most of this century, yields kept moving lower and the Nasdaq kept moving higher.

Sure, when the 2008 crisis hit that sent yields tumbling along with technology shares, but that simply set up a decade of gains. It is still rather jarring to see the Nasdaq thrive at a time when many other sectors are declining on concerns that the banking crisis signals the US will enter recession.

The Nasdaq could still face a rough reckoning given that its declines have been so mild over the past year, when the Federal Reserve’s steep interest-rate hikes sent yields soaring. That sets tech stocks up for a repeat of the rout that hit the sector in the early 2000s. Back then the Nasdaq 100 rallied as yields rose, then came crashing down when they fell.

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