BofA sees "trouble" ahead for tech stocks despite big inflows
Tech stocks may face challenges in the second half of the year despite recent inflows, as central bank liquidity decreases and investors shift from equities to bonds.
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Stocks are facing a "real" yield problem as investors become more focused on rising real yields, which could result in lower stock prices and a hit to the P/E multiple.
Strategists at BofA Global Research predict trouble for technology stocks in the second half of the year despite the sector's recent large inflows, pointing to the correlation between central bank liquidity and the Nasdaq Composite, which has outperformed by 28% this year, as evidence.
Investors expecting a continued surge in technology stocks due to enthusiasm over artificial intelligence may face trouble as central banks tighten monetary policy, according to Bank of America strategists. The correlation between central bank liquidity and tech stocks is a cause for concern, as central bank balance sheets have shrunk while the Nasdaq continues to climb, indicating potential risks ahead.
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