2020 may well have been the year of the massive rises in the value of stocks of Silicon Valley-based big tech companies, largely because their area of 'tech' is around e-commerce, social networks, online streaming services and internet access.
This new era of what constitutes technology – online services rather than mechanical engineering – means that during 2020, when many governments instigated the closure of shops and workplaces, whole populations were forced to do almost everything online.
The Silicon Valley giants went from strength to strength.
Given the newfound way of life in which everything from groceries to entertainment is just a click away, it would be easy to consider that this band of internet giants would continue to bolster the US stock market.
This was not the case, and parts of 2021 and 2022 represented a period of tech stock volatility. As most technology firms are listed on the NASDAQ exchange in New York, the NASDAQ Composite Index showed a very varied pattern, including a sustained period in which tech stocks were depreciating rapidly.
That may well have been a surprise for many investors, especially during the halo effect that the new Special Purchase Acquisition Company (SPAC) listings were giving to the tech-friendly exchange. At that time, relatively new companies that few people had heard of were suddenly bypassing the majority of entry requirements and listing for valuations of tens of millions of dollars on the NASDAQ exchange.
This fad has now passed, and the NASDAQ Composite Index had lulled for some time.
Today, however, the index begins the trading day at its highest point in an entire year.
Yesterday's close of business resulted in the index reaching 13,816.77, which is a staggering 2,494 points higher than this time last year. During the past three months, the NASDAQ Composite Index has been consistently rising in value, and today's peak is of great interest.
Some of the contributors to this have been Tesla's runaway performance in recent times. Last week alone, Tesla shares were on a roll, and this has likely been a contributor to the NASDAQ's overall high value.
A clear indicator that memories are short is that stocks in some of the banks listed on NASDAQ are up, a factor driven by hard facts and figures, as the dividend announcements had shown that banks were paying higher dividends than the previous accounting session. This is of interest given the banking 'crisis' that was publicised in high-profile news articles earlier this year during the demise of Silicon Valley Bank and some smaller regional banks across the United States, shortly followed by Credit Suisse.
Faith is back in the performance of existing banks, it seems. The question is, for how long? Across the channel in England, there are now widespread reports of banks engaging in the practice of closing the accounts of customers whose views the banks do not approve.
An investigation is being launched, and at a time during which consumer confidence in the commercial banking sector has been dented many times since the 2008/9 financial crisis, caution will likely be the order of the day among investors.
Volatility on one of the world's most prestigious stock exchanges is interesting and, given its recent track record, worth following.
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