NEW YORK (Reuters) - A bet on tech companies has been a solid one in the aftermath of the coronavirus-induced market crash, but some investors are questioning whether those stocks can maintain their momentum if jobs do not recover soon.
Less than three months after the rapid spread of the novel coronavirus spurred unprecedented lockdowns across the U.S., pushing the unemployment rate to levels not seen since the Great Depression, the Nasdaq 100 Index .NDX on Thursday broke through to reach a new intraday high. The Nasdaq Composite Index, nearly half of which is comprised of technology and communications firms, is still yet to crest such a high.
Yet while the pandemic has benefited technology companies - and their investors - by driving greater adaptation of ecommerce, remote work and cloud computing, for instance, the risk is that the slowdown in the real economy will soon catch up to the gains.
“No matter who you are, you need healthy customers who have a budget to pay you,” said Kevin Landis, portfolio manager of the Firsthand Funds, who expects companies he holds such as streaming firm Roku Inc (ROKU.O) and online education company Chegg Inc (CHGG.N) to struggle to expand if unemployment remains high. “If the overall economy suffers that is going to take some steam out of the tech companies eventually.”
So far, the Nasdaq Composite has proven more resilient than other broad market benchmarks, in part because it has little exposure to sectors such as energy, retail and travel
