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The rally in the biggest US technology stocks is at risk of fading further if the US economy continues to cool, according to Bank of America Corp.\u2019s Michael Hartnett.<\/p>\n
The strategist \u2014 who is bullish on bonds for the second half of 2024 \u2014\u00a0has said<\/a>\u00a0signs of an economic slowdown would fuel a rotation into stocks that have lagged behind the pricey tech mega-caps this year.<\/p>\n In a note on Friday, Hartnett said recent data suggested the global economy was \u201cill,\u201d and that \u201cwe are one bad payroll away\u201d from big tech stocks losing their dominance.\u00a0<\/p>\n The upward trajectory of technology stocks including Apple Inc., Amazon.com Inc., Alphabet Inc., Microsoft Corp., Nvidia Corp. and Meta Platforms Inc. has been derailed in the past two weeks as investors flocked into small caps on bets that the Federal Reserve could begin cutting rates soon.<\/p>\n About $2.6 trillion has been erased from the market capitalization of firms in the tech-heavy Nasdaq 100 Index since it hit a record on July 10, also fueled by worries that big investments in artificial intelligence may not pay off any time soon.<\/p>\n Still, BofA\u2019s Hartnett said equity bulls were holding on to the belief that a correction was \u201chealthy\u201d as the market hadn\u2019t fallen below critical levels. The Nasdaq 100 has dropped about 9% since July 10, but it\u2019s still up more than 30% since hitting a low in October 2023. US equity futures advanced on Friday, putting them on track to recoup some losses.<\/p>\n The bank\u2019s custom bull-and-bear indicator edged up to 6.9 in the week through July 24 to the highest in over three years. A reading above 8 would flash a contrarian sell signal \u2014 which could be triggered if fund managers\u2019 equity allocations rise and cash levels decline further, and a rally in the laggards leads to an improvement in market breadth, Hartnett said.<\/p>\n<\/div>\nRecommended Newsletter: <\/strong>CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about\u2013and from inside\u2013the C-suite. Subscribe Now<\/a>.<\/div>\n<\/div>\n