The Nasdaq Composite Index fell 2.7% in May, extending its losses for the year to 22.5%. The index is now in a bear market, defined as a decline of 20% or more from its recent high.
The decline in the Nasdaq was led by a sell-off in technology stocks. The Technology Select Sector SPDR ETF (XLK) fell 3.2% in May, its worst month since March 2020.
The sell-off in technology stocks was driven by a number of factors, including rising interest rates, inflation, and the war in Ukraine. Rising interest rates make it more expensive for companies to borrow money, which can hurt their profits. Inflation is also a concern for investors, as it can erode corporate profits and consumer spending. The war in Ukraine has also weighed on investor sentiment, as it has created uncertainty about the global economy.
Despite the recent sell-off, some analysts believe that the Nasdaq is still oversold and that it could rebound in the second half of the year. They point to the fact that the index is trading at a relatively low valuation, and that earnings growth for technology companies is still expected to be strong.
However, other analysts believe that the Nasdaq could continue to decline in the coming months, as the Federal Reserve continues to raise interest rates and inflation remains a concern. They also point to the fact that the war in Ukraine could drag on for months, which could further hurt investor sentiment.
Overall, the outlook for the Nasdaq is uncertain. The index is still in a bear market, and it could continue to decline in the coming months. However, some analysts believe that the index is oversold and that it could rebound in the second half of the year.
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