The anchor of asset pricing danced, the bubble of US stock technology stocks burst, and bank stocks became fragrant

U.S. tech stocks, which many investors consider a bubble, have been falling sharply lately. The high-growth stocks that have benefited the most from historically low interest rates are now hit the hardest by expectations of tightening monetary policy by central banks around the world. Heading into 2022, the Nasdaq Composite Index, which is dominated by technology and growth stocks, has fallen the most, and the index has fallen 9.7% from its Nov. 19 high.

A survey recently released by Deutsche Bank showed that most of the more than 500 respondents believed there was a bubble in U.S. technology stocks. In a survey of market watchers last week, 49 percent thought there was a bubble in the industry, 39 percent disagreed, and the remaining 12 percent said they didn't know.

Bank of America's January global fund manager survey showed that the net allocation of technology stocks fell 20 percent from the previous month to 1 percent, the lowest level since 2008.

However, it has been difficult to correctly identify an asset price bubble or determine the timing of its collapse. U.S. tech stocks were considered one of the most frothy assets in a Deutsche Bank survey last March, but the price of tech stocks has continued to rise since then.

However, the recent stock market decline comes amid growing widespread belief that the Fed is preparing to start raising interest rates and curtailing the unprecedented accommodative monetary policy that helped the stock market soar during the pandemic.

Julie Biel, portfolio manager and senior research analyst at Kayne Anderson Rudnick, said, "The rise in interest rates will continue and everyone's decisions must take this into account – not just those who borrow, but mainly valuation factors." "As a result, those super-high narrative-driven tech stocks will continue to take a hit."

However, Goldman Sachs data shows that not all tech stocks perform the same.

Strategist Peter Oppenheimer wrote in a report today that the market is differentiating between defensive, strong balance sheet and cash generation technologies to unprofitable long-term technologies. Arguably, companies that have not been profitable for a long time have reached bubble levels and have now made the most positive adjustments.

Seema Shah, chief strategist at Principal Global Investors, said that looking ahead, she believes unprofitable technology companies will face the greatest pain, and said that those with strong balance sheets and pricing power will have room for further growth.

It has to be said that due to the continuous rise in bond yields, the market has undergone earth-shaking changes this year.

On the one hand, U.S. technology stocks have fallen out of favor, and on the other hand, bank stocks, which have been shunned by investors, have once again been welcomed.

Tech stocks continue to plummet, looking like more than just a short-term correction: A survey of global fund managers in January by the Bank of America showed that the industry's net allocation fell 1 to 20 percent from the previous month, its lowest level since 2008. Meanwhile, Bank of America's clients' inflows in bank stocks rose to 41 percent, close to the record set in October 2017.

Strategists, led by Michael Hartnett, wrote in the survey: "Central bank tightening remains the number one risk to the market in 2022. "This is bad news for expensive tech stocks whose valuations are based on future growth expectations, and good news for bank stocks." For much of the past decade, these stocks have suffered losses in ultra-low or negative yields.

Bank of America's survey, which showed the new popularity of the banking sector, was conducted Jan. 7-13 and involved 329 fund managers who manage assets totaling $1.1 trillion. The survey shows the new popularity of banks.

From now on, the direction of the market may depend in part on the earnings season that begins this week. Russ Mould, investment director at AJ Bell, said that in addition to goldman Sachs (GS.US, which has already released earnings reports, companies including Netflix (NFLX.US) and bank of BAC.US will release earnings reports this week, which may turn the market situation around.

This article originated from the Zhitong Finance APP