Surging technology shares propelled the Nasdaq Composite Index sharply higher on Monday, a sign that Wall Street’s tech-driven rally hasn’t topped out yet.
The Nasdaq Composite Index came within 1.6% of all-time highs Monday morning. The index rallied 1.5% to 10,663.00.
Citrix Systems (NASDAQ:CTXS) was the Nasdaq’s best-performing stock, rising 6%. Shares of Amazon Inc. (NASDAQ:AMZN) rose 5.5%.
Surging tech shares also propelled the S&P 500 Index higher. The large-cap index rose 0.4% despite losses in seven of 11 primary sectors.
The Dow Jones Industrial Average declined by as much as 157 points before paring losses. It was last down 47 points or 0.2%.
The Nasdaq is in the process of erasing all of last week’s decline. The tech-heavy benchmark fell 1.1% last week, while the S&P 500 and Dow rose 1.2% and 2.3%, respectively.
Technology shares have vastly outperformed the broader stock market over the past six months. Fears that the so-called tech bubble is about to pop have persisted in the wake of record Federal Reserve intervention in the market.
The sector’s weighting in the S&P 500 has also raised alarm. For the first time since the dot-com bubble, technology stocks now account for more than 35% of the S&P 500.
Galaxy Digital CEO Mike Novogratz says technology stocks are in a bubble:
If monetary policy were to tighten, technology stocks would be the first to suffer, according to Bank of America’s chief investment strategist Michael Hartnett. Over the past six months, tech-sector outperformance has been the largest since the 1999 dot-com bubble and the 2008 global financial crisis.
As ZeroHedge notes, if the S&P 500 were just “tech, health care, Amazon, Google,” it would now be worth 4,173–far above the February high of 3,393.52. If the S&P 500 were “everything else,” it would be worth 2,924.
Although global monetary policy remains ultra-loose and highly accommodative, gradual signs of tightening have emerged in China. Even the Federal Reserve’s balance sheet appears to have topped out for now.
Strategists at Bank of America warn that tighter policy conditions could be the pin that pops the technology bubble. If that were to occur, Chinese tech stocks would be the first to fall.