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Outperforming Wall Street | Tech stock indexes

The NASDAQ 100 – to the moon

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The NASDAQ 100 looks pretty good over the past five years, especially now it has breached 20,000.

The most important thing for me is how the recent global market sell off from July through to September has been consigned to history.

It seems like ages since the market was still discussing if the Fed will cut, and by how much.

Now that the Fed has actually cut and is willing to accommodate more cuts through 2024, I can get back to the normalisation of earnings reports and economic data.

Speaking of which, next week we have Goldman Sachs, Morgan Stanley, and Citigroup reporting next week among other financial stocks.

Then there’s the small matter of tech earnings including Taiwan Semiconductor Manufacturing and Netflix.

As always if the news turns out to be broadly positive, then the tech trade will continue to reject the lows and maintain upward prices.

In focus: the global supply chain

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On June 10th The International Longshoremen’s Association (ILA) union halted talks with the United States Maritime Alliance (USMX).

The ILA represents approximately 45,000 port workers and the USMX represents container carriers, marine terminal operators, and port associations.

The ILA cancelled talks with USMX after discovering that APM Terminals and Maersk Line are using tech which autonomously processes trucks without ILA labour.

[there is] no point trying to negotiate a new agreement with USMX when one of its major companies continues to violate our current agreement with the sole aim of eliminating ILA jobs through automation

Harold J. Daggett, President, ILA

Workers are on a coastal-wide strike starting today.

The robotic creep infiltrating the global economy shows no signs of slowing down and workers have little recourse other than to strike.

Their previous coastal-wide strike was in 1977.

Supply chain disruption

Investors are being warned that if strikes are protracted, not only will it disrupt the US east coast, but the entire global supply chain leading to speculation that President Biden may have to force workers back on the job via the Taft-Hartley Act which the President has declined to do so far.

The COVID-inspired global supply chain disruptions saw huge shortages in chips, baby milk formula, and tampons.

The ILA has asked for a 61% pay increase on the back of recent union successes such as the United Auto Workers (UAW) wage increases and benefits for its members in response to the cost of living in 2023 which included:

  • a 25% increase in base wages
  • An immediate 115 increase
  • cost of living increases equivalent to $42 an hour

The worry for the Fed would be an increase in the cost of goods as supplies decline, but it’s early in the strike action so it has little impact on the tech trade long-term.

Expect short-term stock price volatility so long as the strikes are continuing.

S&P 500 closes September at record high

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September has historically been the worst month of the year for stocks but the S&P 500 is up 5.4% for the third quarter, and more than 20% for the year.

When the Fed cut rates by 50 basis points earlier in the month, it surprised the market as most investors expected a 25 basis point cut and stocks rallied.

This bolsters the view that the stock market and the tech trade are a Fed-led market.

Anything the Fed can do, stocks can do better.

This Friday’s non-farm payrolls report should grab your attention since the Fed’s 50 basis point cut could allude to a weaker employment position than previously thought.

Also of note are the job openings and labor turnover surveys from the US Bureau of Labor Statistics which are due out today.

If we get positive numbers from these reports, expect stocks to continue climbing over the short-term.

As for the real-world business of tech trade returns have been extremely positive.

Year to date the NTC Global Technology Growth Index (PILTECHX) is up 51.67%.

Its benchmarks are also in positive territory YTD : First Trust NASDAQ-100 Technology Sector Index Fund (QTEC) 12.96%, and SPDR S&P 500 ETF Trust (SPY): 22.05% respectively.

The tech trade is still on.