NASDAQ to crash due to recession - Bank of America

According to Bank of America (BofA), a recession is likely to cause a collapse in technology stocks soon.

The high-tech sector is at risk due to the FRS policy and the current economic climate.

This year, tech stocks have seen a resurgence after taking a significant dip in 2022.

Since the start of the year, the NASDAQ 100 index, which is highly sensitive to interest rates, has seen a 22% increase due to expectations of an early loosening of the Federal Reserve's monetary policy.

Investors are anticipating a resurgence of tech stocks in 2023, even though the IT sector has seen a decrease in profits.

Bank of America has warned that technology stocks will suffer a decline due to the upcoming recession in the second half of the year, according to RBC citing Bloomberg.

The banking sector and technology will be affected in the same way as they were in 2008 if the US experiences a prolonged economic downturn.

Bank of America analyst Michael Hartnett warned that the actions of the Fed and the state of the economy present risks to the expansion of the technology sector.

He believes that the markets may be too hopeful that there will not be any more increases in interest rates in the future.

Hartnett believes that the US Federal Reserve is unlikely to cease increasing rates due to the high inflation and low unemployment in the nation.

Bloomberg Intelligence predicts that the bubble in tech, media, and telecoms stocks could burst as companies confront the fact of higher interest rates for a longer period of time and more modest earnings expectations.

In the last 12 months, the US Federal Reserve has implemented its most intense monetary tightening program since the 1980s in order to control unprecedented inflation. From March 2022 to the present, the Fed has increased rates by 500 basis points, bringing them to the highest level since 2006 (5–5.25%).