Tech Bubble Comparisons

By Scott Poore, AIF, AWMA, APMA
Chief Investment Officer, Eudaimonia Group

Momentum stocks were back in vogue last week as investors shook off economic data and September rate cut hopes were renewed.  There have been many comparisons made recently to the Tech Bubble of the late ‘90s and the current state of the market.  However, volatility and price movement between the two periods does not seem to match up.  We have not seen a spike in the VIX (volatility index) as we have seen previous to bear markets in 2000, 2008, and 2020.  In addition, we have still not seen a dislocation between Nasdaq stocks and S&P 500 stocks like we witnessed in 1999 and 2000.

Meanwhile, the labor market is beginning, if it hasn’t already, normalized.  The JOLTs job openings report last week showed another decline in the number of job openings.  On a per unemployed worker basis, job openings have reached pre-pandemic levels.  Employers are being more selective in their hiring and current workers may not find it so easy to switch jobs.  At the same time, we are not seeing mass layoffs in the labor market, so stability in the job market is evident.  Last week’s Jobs Report showed 272,000 jobs were added, which was higher than the market expected.  The futures for a September rate cut show about a 50:50 probability, but this week’s CPI report for May is expected to show little change from the previous month.  Fed comments will be closely watched this week.

___________________________________________________________________________________________________________

Disclosures

The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. 

Past Performance does not guarantee future results.