The Nasdaq Composite index has gained 15% during this year’s first quarter and is on track to post its best quarterly performance since 2020 as technology stocks rally.
After a brutal selloff in 2022, several leading technology stocks have skyrocketed to start this year, pushing the Nasdaq up in the process.
Stocks that have seen big gains since the start of the year include Meta Platforms (META), up 67%, Tesla (TSLA), up 80%, and Nvidia (NVDA), up 91%.
In the last decade, there’s only been one better quarter for the Nasdaq Composite, which was the second quarter of 2020.
That was at the outset of the pandemic when the Nasdaq rose more than 30% after crashing at the end of March 2020, and as the U.S. Federal Reserve pumped liquidity into the market.
Globally, technology stocks have also outperformed other equities in the first quarter of this year. Bank and healthcare stocks have been among the worst performing stocks to start 2023.
Some analysts expect the current technology rally to continue as central banks around the world pivot from fighting inflation and may cut interest rates by year’s end. A low interest-rate environment favours growth stocks such as those of technology companies.
However, while the Nasdaq Composite is up year-to-date, its Q1 gain comes after it led all U.S. indices lower in 2022, posting an annual decline of 34% — one of its worst performances ever.