January is a good time for investors to think about investing in the Nasdaq due to increased chances of growth. The Nasdaq Composite Index has surged 16.54% year-to-date, recording its best start to the new year since 1987. Tech stocks have been at the forefront of the soar, with the Technology Select Sector SPDR Fund (XLK) jumping 17.7%.
The Nasdaq has increased much faster than the S&P 500 and the Dow Jones Industrial Average due to several factors. Firstly, tech giants such as Amazon, Apple, Microsoft and Facebook have continued to experience growth. These companies have outperformed the market by a wide margin, boosting the Nasdaq significantly. Furthermore, many investors are viewing technology as a safe haven during the current economic uncertainty.
The Nasdaq has also been helped by an increase in short-term interest rates, which has resulted in higher yields on tech investments. The combination of low interest rates and strong technology stock performance means that the Nasdaq has the best odds of gains, even though broader market risk remains.
Furthermore, the Nasdaq is likely to benefit from the “Nasdaq lift”, which is expected to boost prices due to an inflow of money into the Nasdaq from investors wanting to take advantage of the current market dynamics.
Overall, January is a good time to invest in the Nasdaq due to higher odds of gains. With higher yields on tech investments and the Nasdaq lift, there are increased chances that the Nasdaq will continue to surge. Investors looking to invest should take a look into tech stocks that have been at the forefront of the growth, such as Amazon, Apple, Microsoft and Facebook.
