to rise gradually; recently they have soared. American stocks are up by 21% since the end of October and stand roughly 5% above their vertiginous peak in January 2022. On February 22nd Europe’s equities set a new record for the first time in two years. India has been enjoying a multi-year boom as optimism about its economy abounds. Even—a byword for stagnation—have at last exceeded the level they reached in 1989 before a decades-long slump. It has been an extraordinary run.
Yet there are also reasons to see markets’ exuberance as rational. As central banks all over the world tightened monetary policy at a pace not seen for a generation, many analysts warned about the danger of recessions and falling corporate profits. At the start of 2023 Wall Street savants predicted that in the year to come America’s economy would grow by just 0.7%. In the event it achieved more than three times that amount.
Judging the boom to be justified, though, does not make it wise to rush out and buy stocks. What happens next is unlikely to fill investors with glee. That is partly because the extreme excitement aboutextends beyond Nvidia to other members of the “Magnificent 7” group of tech stocks, such as Microsoft, whose eventual commercial strategies in theera are still far from clear. These firms are hoarding Nvidia’s chips in the belief that, one way or another, their.
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