Lagging S&P 500: Traders could have been using tech stocks as a hedge or risk offset to shield risk from the banking issues

Last week we heard from Chris Beauchamp from IG, who shared his view on the S&P 500 performance, which has been much worse than Nasdaq and tech stocks. This time we're pleased to share comment of Joseph Jeffries, market analyst at Eightcap. 

✕Source: TradingView

FXMAG.COM: Companies shown in the chart (TSLA, NVDA, AMZN, GOOG) have increased significantly more than SPX itself YTD. Taking it into consideration, why the gain of SPX amounts to subtle 5%? Naturally, SPX is about 500 companies from various branches, but isn't it certainly about the banking sector weakening the index? What companies have under performed recently weighing on the index performance?

Joseph Jeffries (Eightcap): There was definitely a flood back to tech stocks after the long decline that was based on a few things like missed earnings and other issues in the industry. Meta started the revival months ago after it gave positive guidance, this set off a strong return to tech stocks. Combined with better-than-expected news banking issues started to emerge and this could have been a factor in why sellers started shifting liquidity from some sectors to other sectors. 

During the runs when we saw the DOW and SPX start lagging the Nasdaq it was that shift in liquidity that was causing the difference

Joseph Jeffries (Eightcap): During the runs when we saw the DOW and SPX start lagging the Nasdaq it was that shift in liquidity that was causing the difference. Traders could have been using tech stocks as a hedge or risk offset to shield risk from the banking issues. This could be a reason we saw the Nasdaq continue to run while the DOW and SPX struggled during that period. 

Joseph Jeffries (Eightcap): As stated the reaction was seen as overdone and we can see now that the DOW and SPX have started to catch up with the gains seen on the Nasdaq.