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Tech stocks: Nasdaq having its worst year ever

Yahoo Finance’s Jared Blikre joins the Live show to break down how stocks are trading as the tech sector sees a downturn.

Video transcript

BRIAN CHEUNG: Well, it's been a rough year overall, driven largely by the sell-off in tech. And here with the retrospective on how far we've come now that we're at June 30, let's bring in Yahoo Finance's Jared Blikre. Jared, natural question-- how much farther to go?

JARED BLIKRE: Well, it depends on the 10-year, Brian. I'm glad we're talking about bonds today. I did a little study. I did-- I crunched the numbers. Worst start to the year for the NASDAQ ever. And let's go to the YFi Interactive. I pulled up some stats. And you can see right at the top, we are now down 28 and 1/2% as of yesterday's close. We don't know what's going to happen for the rest of the year. But in 2002, we were down 25%. And we went down an additional 8.7% in the trailing six months of the year.

And then in 1973, very similar situation. '74, '84, not similar. The long and short of it is, what I found is that going through history, it depends on where you are in the business cycle. If you're at the beginning of a secular bull market-- and secular is a very long-term time frame. We talk about long-term. That's maybe a year or two. Secular is really on the decade level. So when you have the beginning of a new bull secular market, that bodes well for any kind of dip buying.

And if you have the secular bear market, like we had at the top of the tech bubble in 2001, that lasted all the way through the global financial crisis. We didn't see new highs in the NASDAQ until 2015. You put it all together, I don't know exactly where we are in this business cycle. If we're starting a new secular bear, we might have an echo rally that is predicated on lower long-term interest rates. In other words, the 10-year, if it falls back down below 3%, we could see a nice tech rally. But this is getting long in the tooth. Lower interest rates not here to stay probably.

AKIKO FUJITA: I mean, I can't tell you how many conversations I've had with those in the tech sector, who keep saying, this is not 2000.

JARED BLIKRE: Yes.

AKIKO FUJITA: This is not a repeat of that. And you seem to be pointing to that as well. But that has largely driven the declines that we've seen in the first half.

JARED BLIKRE: Yeah, and I think it comes to-- and I have the YFi Interactive so I can show visually what's happened. This is a month to date view. So this is as of yesterday's close. We're going to update this as of today because this is the last day of the quarter. Here's a quarter view. You can see Tesla's down 37%. Even a staple like Costco up here, that's down 17%. And when we're thinking about what kind of stocks are going to take off over the next three to six months, it depends on the interest rate structure.

But I will point out, look what happened to China over the last quarter. We see a lot of growth here. Pinduoduo, that's up 50%. We have Alibaba just posting some nominal gains, but Baidu up 12%. When you take a look at some of the leaders over the last month-- and I'm going to pull up-- this is my Leader Sentiment Index. KWEB is Chinese stocks. IBB is biotech. Biotech is showing some signs of life here. TAN is a solar ETF. We're seeing some signs of life there.

So there are pockets of strength that are already showing up in the market. And just because the indices are depressed, we want to look for some of those leaders. And so we're seeing that in software. We're seeing that in Chinese stocks and a little bit in disruption. But those ARK components really not looking--

BRIAN CHEUNG: You--

JARED BLIKRE: Perking up right now.

BRIAN CHEUNG: I was gonna say, you kind of wonder with the Chinese stocks, though, because they were selling off prior to the beginning of the year.

AKIKO FUJITA: Well, and also, that wasn't so much a rate story, right? It was more about the regulatory concerns coming down, the crackdown. I guess that was accelerated by the concerns around these high growth companies who want higher [INAUDIBLE]

BRIAN CHEUNG: Well, and then the shutdown as well.

AKIKO FUJITA: Well, the shutdown, too.

JARED BLIKRE: I would say, arguably, they were beaten down for those reasons more than everything else. And so that's why I think they're bouncing back the quickest.

BRIAN CHEUNG: All right, well, we got six more months to go, so we'll check in again at the end of the year.

JARED BLIKRE: See you in six months, guys.

BRIAN CHEUNG: Exactly. Yahoo Finance's Jared Blikre, thanks so much.

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