"The Last Bear" is forced to enter the market, US tech stocks "someone runs first", Bank of America: Mini-Tech Bubble Reappears.

Facing the astonishing rise of US technology stocks in the first half of the year, those fund managers who waited and watched finally met their downfall. However, what lies ahead of them is that the best days for technology stocks may have passed.

As an indicator of investors' stock exposure surged to the highest level since April 2022, concerns about the Fed's interest rate hike and recession panic ended the S&P 500's longest consecutive rise since 2021. The index fell 1.4% in the four trading days this week (US stocks were closed on Monday due to the June holiday), while the Nasdaq 100 index fell 1.3%.

In the face of this week's bleak market, Bank of America warned on Thursday that the small tech bubble of 24 years ago is repeating itself, and the possibility of a decline in US stocks this summer is greater than the possibility of a rise.

The stock market keeps rising, and more and more fund managers are entering the market

Nathan Thooft, global asset allocation director at Manulife Asset Management in Boston, said:

We don't have much time left, but it's very important to participate in the market recently.

Thooft has been increasing his exposure to technology stocks for the past three months, but he said:

It is well known that defensive measures are easily encountered in later cycle investments, that is, how to participate in market transactions while defending when the market performs better than expected.

Since the beginning of this year, the Nasdaq 100 index has risen by nearly 40%, making fund managers who missed this increase and were complained by clients more and more eager to join.

In response, Fahad Kamal, chief investment officer of private bank SG Kleinwort Hambros Bank, said:

As the market rises, more and more fund managers are joining in for fear of being fired.

The snowball-like rise of the US stock market has attracted more and more investors to enter the stock market. Kamal believes that this marks the endurance of the stock market.

He said:

The factors that contributed to this rebound have changed.

Many people are watching and holding a lot of cash. Ironically, their entry into the market may provide more impetus for the continuation of this rebound.

Before the stock market fell this week, retail investors embraced the stock market.

According to exchange public data compiled by JPMorgan, in the week ending this Tuesday, retail investors bought $4.4 billion worth of stocks, which is two standard deviations higher than the 12-month average.

The long-term market sentiment deteriorates, and the scale of capital outflow from the stock market reaches the highest level in 10 weeks. Bank of America warns that the "baby bubble" is coming back.

At least for now, the market sentiment is optimistic.

Goldman Sachs' index tracking market sentiment rose to its highest level since April 2021 this month.

A survey by HSBC of the world's 60 largest asset management companies showed that short-term market sentiment has soared, but long-term sentiment has deteriorated.

Michael Hartnett, a strategist at Bank of America, cited data from research firm EPFR Global on Thursday, saying that thanks to the high market sentiment, technology stocks attracted $19 billion in inflows in the first two months.

However, EPFR Global data also shows that investors have since taken a step back. In the week ending Wednesday, outflows from technology stocks reached $2 billion, the highest level in the past 10 weeks.

Hartnett pointed out that a similar situation occurred in 1999, during the Internet bubble, when the stock market rebound formed a "baby bubble" - a mini-bubble.

Hartnett said that the possibility of a decline in US stocks this summer is greater than the possibility of an increase. His team expects that the S&P 500 index will rise by a maximum of 100-150 points before Labor Day in September, while the decline may reach 300 points.

As of the overnight close of the US stock market, the S&P 500 index fell 0.77%, up 13.71% so far this year, to 4,348.33 points.

At present, the market has digested the expectation of further interest rate hikes by the Federal Reserve this year. At the same time, the pessimistic prospect of an economic recession is also putting pressure on US stocks.

Hartnett correctly predicted the decline of the US stock market in 2022, but his pessimistic prediction for the US stock market this year is not accurate.

Similarly, Chris Harvey, head of equity strategy at Wells Fargo, said this week that the current market is similar to the technology boom of 1999 and 2000, which lasted until policy tightening. Marko Kolanovicue also said that as the lagging effects of the Federal Reserve's aggressive tightening monetary policy become apparent, the US stock market will experience turbulence in the second half of this year.

Hartnett said that investors are "trapped" by growth stocks such as technology, because commercial real estate is still "likely to suffer a severe recession, especially if the Federal Reserve raises interest rates again."