Understanding the Market | Why did tech stocks skyrocket last night?

After the New Year's "Waterloo", the US stock market has returned to track, with technology stocks experiencing their best day since mid-November last year.

Overnight, the Nasdaq rose 2.2%, marking the largest increase in nearly two months; the Nasdaq 100 index rose 2.11%, reaching a phase high after five consecutive declines.

What are the factors that have contributed to the collective rebound of technology stocks?

First and foremost, and most crucially, FOMC voting member and Dallas Fed President Logan hinted at a slowdown in quantitative tightening (QT) last Sunday:

"As the ON RRP tool balance approaches its low point, we should slow down the pace of balance sheet reduction."

"Slowing down the normalization of the balance sheet is actually more efficient."

"Because this can smooth the redistribution and reduce the risk of us having to stop QT prematurely."

Deutsche Bank subsequently issued a warning: the Federal Reserve is cutting interest rates to address economic recession, and in this situation, QT will come to an end.

Nick Timiraos, a well-known financial journalist known as the "New Fed News Agency," tweeted a comment: "Logan's comments on QT are worth noting."

A netizen commented on Timiraos' tweet: "This means that the duration of QT will be longer than Abate's estimate at Barclays."

Timiraos replied to the comment:

"Slower (slowing down), (longer in time)."

Previously, Barclays analyst Joseph Abate predicted that the Federal Reserve would "proceed cautiously" and should "stop QT as soon as possible."

Secondly, multiple positive news has helped to offset three-quarters of the decline since the New Year, leading the market.

• CES 2024 has created a positive atmosphere;
• NVIDIA launched three SUPER graphics cards, and its stock price soared 6% to a new all-time high;
• The official website shows that the heavyweight mixed reality headset VisionPro will be listed in the United States on February 2nd, and Apple, which fell nearly 6% last week, rose 2.4%;
• BlackRock and others have submitted key documents, and the market expects further approval of Bitcoin spot ETF, leading to a 3.7% increase in related concept stocks;
• Netflix, Alphabet, Meta, and Microsoft all closed higher.

Lastly, another factor is that traders have flocked to the lackluster market performance since the beginning of the year ahead of the release of December inflation data in the United States on Thursday.