The Nasdaq broke through the 6,000 mark for the first time on Tuesday as investors move into tech-heavy growth companies on concerns US President Donald Trump will be unable to deliver on his economic expansion promises.
According to the Financial Times, strong earnings coupled with investor sentiment over Trump's inability to pass reform has led investors to move into companies where the underlying growth is less affected by the macro environment.
The Nasdaq rose 0.7% on Tuesday to 6,025 points while the small-cap index, the Russell 2000, climbed 0.94% to 1,411 points.
Russ Koesterich, manager of the Global Allocation fund at BlackRock, told the FT: "This is a risk-on rally but not a reflation rally - one of the characteristics of this market year-to-date has been a strong outperformance by growth over value."
A renewed appetite in the tech sector especially the FANG stocks, Facebook, Amazon, Netflix and Google, has caused almost a 12% gain in the Nasdaq this year compared to 6.5% for the S&P 500.
Furthermore, many investors argue tech stocks stand to gain from Trump's repatriation policy.
David Older, head of equities at Carmignac, told Reuters tech companies have a total of around $2trn offshore between them, with Apple and Google holding $212bn and $60bn abroad respectively.
He said: "Repatriation is like gas on the fire. You have a backdrop of stockmarkets being high which is positive, interest rates are low, there potentially is a much improved regulatory environment under Trump and then this one-time repatriation of several hundred billion."
The Dow Jones also was on the rise on Tuesday, climbing 1.1% to 20,996.
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