Tech stock meltdown puts the Nasdaq-100 on the verge of breaking out of the bear market

A “meltdown” in tech stocks put the Nasdaq-100 index on course to break out of bear market territory on Thursday.

The NDX index,
heavily weighted towards megacap names, rose 2.9% to 12,727 on Thursday afternoon and traded as high as 12,880.98. A close at 12,815.21 or above would mark a 20% rise from its October 17 low of 10,692.06, meeting widely used criteria for exiting a bear market.

The broader Nasdaq Composite COMP,
was up 2.2% near 12,083. It would emerge from a bear market with a finish at or above 12,255.95.

Tech and other growth-oriented stocks were crushed in 2022 as the Federal Reserve aggressively raised interest rates in an effort to rein in inflation. They rebounded strongly in the new year. The Fed announced a widely expected quarter-point rate hike on Wednesday, but stocks rose after remarks by Fed Chairman Jerome Powell failed to convince investors that the central bank would not would not cut rates before the end of the year.

The parent company of Facebook Meta Platforms Inc. META,
led the surge on Thursday after reporting stronger-than-expected results along with a major share buyback announcement. Earnings from Apple Inc. AAPL,
+2.85%, Inc. AMZN,
and Google parent Alphabet Inc. GOOG,

should arrive after the closing bell.

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Louis Navellier, founder of fund management firm Navellier & Associates, called the rally a “classic market meltdown,” a term used to describe a sudden spike in the price of an asset often associated with herd behavior by investors.

Navellier, in a note, said “the fear of missing out is likely to bring an increasing amount of the huge amount of fringe money into the fray.”

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Meanwhile, investors are hesitant to declare a bull market when the Nasdaq hits the threshold, given a history of counterfeits that saw it quickly fall back into a bear market after completing an exit. Indeed, the Nasdaq emerged from a bear market last August, only to crash to new lows for 2022 in October.

The tech rally, meanwhile, was leaving the Dow Jones Industrial Average DJIA,
behind, with the blue chip gauge down 172 points, or 0.6%, while the S&P 500 SPX,
increased by 1%.

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