Dow Jones, Nasdaq 100, S&P 500 Price Outlook:
- The Nasdaq[1] 100 has been the clear winner amongst the three US indices
- As tech stocks diverge further from their industrial counterparts, is the current rally based in the underlying economy or has speculation overrun the market?
- Learn the differences between the Dow Jones, Nasdaq 100 and S&P 500[2]
Dow Jones, Nasdaq 100, S&P 500 Forecast: Is the Rally Unfounded?
The United States stock market has enjoyed a strong recovery from the initial shock of the coronavirus outbreak. In this rebound, the Dow Jones[3], Nasdaq 100 and S&P 500[4] have each reclaimed notable price points and technical levels, but one sector has climbed head and shoulders above the rest. This dynamic is easily visible in the performance of the Nasdaq 100 compared to the Dow Jones as the technology industry leads the charge higher.
Ratio of S&P 500 Technology Sector to S&P 500 Industrials Sector
Chart created in TradingView[5]
The phenomenon is also visible in the ratio of the S&P technology sector to the S&P 500 industrials sector shown above. While technology growth has been outpacing industrials for some time, the divergence between the two really gains pace in March, which directly coincides with the steepest declines experienced by the Dow Jones and Nasdaq 100.
So, while the relative performance of the two sectors is nothing new, can one sector singlehandedly drag the broader indices higher indefinitely? Or will the rally begin to sputter out on fears of weakness in the underlying economy – despite tech strength?
Chart created in TradingView[6]
Unfortunately, these questions are exceedingly difficult to answer, but we can make the claim the underlying economy and many industries are likely
