Surprises of Recession-Aware Markets: Contrary to Conventional Wisdom, Big Techs Became the Winners!

According to WSJ, big tech stocks are “back in the market’s drivers seat”. Despite leverage risks of small cap firms struggling to generate positive cash flows amidst venture capital industry’s doldrums, big tech’s hoarding cash on their balance sheets seem to be more resilient to impending crises.

The S&P 500 has gained 2.9% since March 8 when the infamous Silicon Valley Bank announced the beginning of the bank run which lead to its collapse. That is largely thanks to a big rally in the index’s IT and telecom groups.

According to Dow Jones Market Data, the tech-focused Nasdaq 100 index, which tracks the 100 largest non-financial companies listed on the Nasdaq exchange, rose 18.5% QoQ and was on track for its best 3-month performance since Q2 2020. The index also came out of a bear market on Wednesday -- and is now up 21.4% from its Dec. 28 closing low.

Meanwhile, the Nasdaq Composite ended Friday at 12,221.90, up 19.4% from a bear market low set on Dec. 28. According to Dow Jones Market Data, the level needed to enter a new bull market is 12,256.

The S&P 500's communications services sector rose 5.6%, while the IT sector gained 6.3%, after Silicon Valley Bank announced for the first time since March 8 that it must sell all securities available for sale to bolster its deteriorating financial position.