As investors turn their gaze to the markets for 2021, one of the foremost indices that come to mind is the NASDAQ 100. This index has shown immense growth potential over the past couple of years, with various stocks heavily contributing to the index’s success. Recently, however, NASDAQ 100 has been hinting towards a potential pullback.
A pullback on the NASDAQ 100 could mean a lot of things depending on the severity and the length of the pullback. Nevertheless, it could potentially derail everything the index has achieved in the last few years and put a dampener on investor sentiment.
It has been observed that the mass exodus from corporate equities have been causing mainly tech stocks to pull back, and the NASDAQ 100 contains several of these technology stocks such as Microsoft, Amazon, Apple, Alphabet and many more. Additionally, most of these stocks have high liquidity and institutional investors have slowly been shifting away from these forms of stocks.
The pullback in the NASDAQ 100 could also be attributed to the increased volatility and risk aversion that have been witnessed in the markets lately. This has prompted investors to look for more stable investments and the NASDAQ 100’s volatile nature is not suited to long-term investments.
Other reports suggest that the pullback in the NASDAQ 100 is caused by the recent slump in the semiconductor industry. Many of the stocks in the index heavily rely on semiconductor chips for their production, and a surge in chip demand has put a great strain on the companies. This has caused some major players to pull back and take a breather, which has had a ripple effect on the entire index.
All in all, the NASDAQ 100 looks all set for a pullback. Whether it will be a short-term phenomenon or a lingering issue remains to be seen, but it is certain that this pullback will affect investors differently depending on their individual portfolios and risk appetite.