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Nasdaq 100 Outpaces Dow Jones, S&P 500. Has The Rotation Ended?

Nasdaq 100 Outpaces Dow Jones, S&P 500. Has The Rotation Ended?

Peter Hanks, Strategist


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Nasdaq 100 Forecast:

Nasdaq 100 Outpaces Dow Jones, S&P 500. Has The Rotation Ended?

The Nasdaq 100 found itself in an unusual position in November as it lagged the Dow Jones, S&P 500 and even Russell 2000. The underperformance was attributed to a broad rotation away from technology stocks and into some of the more covid-sensitive industries like energy, industrials and airlines on news a potential covid vaccine was in the pipeline. As a result, the tech-heavy Nasdaq 100 fell behind its sister indices - until more recently.

nasdaq, dow jones, S&P 500 daily performance

Source: Bloomberg

As December has progressed, the Nasdaq 100 has once again begun to pull ahead of the Dow and S&P 500. Looking to Monday’s performance specifically, the Nasdaq 100 was the sole winner amongst the major US indices as popular names like Tesla and Apple notched notable gains. Suffice it to say, recent price action may suggest the popular sectoral rotation trade may be losing steam as investors look to favor technology once more.

Some Industrial Stocks Continue to Outpace Technology

nasdaq 100, dow jones, boeing and us steel corp price charts

Source: TradingView

That being said, there may still be some gas left in the tank for the sectors hard struck by coronavirus. While the broader flow into these baskets has slowed, some single-name stocks have continued to outperform. United States Steel Corporation (X) and Boeing (BA) are two industrial members that have outpaced not only the Dow Jones in December, but also the Nasdaq 100.

How to Pick Stocks – A Guide

While two examples cannot speak for the broader market, it does go to show there is continued interest in some stocks that might have encouraging recovery outlooks. Forecasting price action for these single stocks is another conversation altogether, but their recent outperformance might suggest the popular rotation trade that thrived in November lives on but on a smaller and more-targeted scale – an intriguing market landscape for stock pickers and value investors.

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More broadly, it is currently unclear whether the Nasdaq 100 will leave the Dow Jones and S&P 500 in the dust like it did prior to November, but early symptoms are present. Still, with the inclusion of Tesla to the S&P 500 later this month, a lot has yet to unfold. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.

--Written by Peter Hanks, Strategist for

Contact and follow Peter on Twitter @PeterHanksFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.