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Tech Sector 2022 Outlook: Slowdown Or Reacceleration?

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Tech Sector 2022 Outlook: Slowdown Or Reacceleration?

investing-new.pngStock MarketsDec 31, 2021
Tech Sector 2022 Outlook: Slowdown Or Reacceleration?© Reuters.

By Daniel Shvartsman

Investing.com - The tech sector has led the market for much of the past decade, and the pandemic environment only accelerated that trend. 2021, however, put a crimp in that pattern. As of market close December 30th, the Nasdaq (22.1%) trailed the S&P 500 Index (27.2%) and was about slightly ahead of the Dow Jones Industrial Average (18.9%) on a total return basis year to date. The Nasdaq will finish comfortably in the double-digits return range, with the year-end rally pushing it over the 20% mark, but that is still a come-down from 45% total return in 2020, more than twice its peer indices. Underneath the surface, the action in the tech sector has been a lot more volatile, as early year speculation in SPACs and newly public companies gave way to selling off “pandemic winners”, as their forward growth looks much foggier.

As the end-of-the-year period has made clear, we’re entering a different environment, one of inflation and potential rate hikes on the one hand, and of continued pandemic-related twists on the other hand, including even the possibility that (one can hope) it has finally faded to being a background issue. The immediate and secondary effects on tech, from consumer spending to supply chain snarl to continued software adoption, will be hard to avoid, but also hard to predict.

Click here for the five things to watch for in tech in 2022

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