“This is massive speculation, and it is going to burn itself out quickly,” SEI Investments Jim Smigiel says.
This year’s surge in technology stocks has been especially pronounced in the riskiest corners of the market, suggesting to some sceptics the potential forUnprofitable software developers, crypto firms, meme stocks, electric-vehicle makers and anything even tangentially related to artificial intelligence — they’ve all been on fire as the Nasdaq 100 Index has jumped 16 per cent.
Jim Smigiel, chief investment officer at SEI Investments Co., dubbed the action a “junk rally”, where the lowest-quality stocks do the best. This view is backed up by market positioning, as bearish bets on the Nasdaq 100 are building, according to Citigroup. Some investors are betting the Fed will cut rates later this year, but if that proves to be premature, as last week’s red-hot payroll report suggested it could be, tech’s 2023 rally could be vulnerable.
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