Tesla, FAANG-Led Nasdaq Rebound Unlikely To Last For Long, Wharton Professor Warns

The recent tech-led rebound seen on the Nasdaq may be short-lived, according to Jeremy Siegel, a finance professor at the Wharton School, CNBC reported Tuesday.

What Happened: Siegel was less than upbeat on the tech-heavy index, which gained nearly 3.7% on Tuesday to cap the best day since November.

Siegel associated higher interest rates and optimism on reopenings that continue to come in the way of growth stocks, according to CNBC.

“I don’t think they’re going to do badly. We’re not going to have a crash like we had 20 years ago at all,” said the professor. 

“But I think the outperformers are going to be basically non-tech over the next six to 12 months.”

Tech stocks rallied on Tuesday, with Tesla Inc (NASDAQ: TSLA) up nearly 19.6% at $673.58 and gaining 2.32% in the after-hours session. 

On Tuesday, so-called FAANG stocks comprising of Facebook Inc (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Amazon.com, Inc (NASDAQ: AMZN), Netflix Inc (NASDAQ: NFLX), and Google, a subsidiary of Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) were all in the green.

Facebook shares jumped almost 4.1% to $265.74, Apple shares were up 4.06% to $121.08, and Amazon shares rose 3.76% to $3,062.85.

Netflix shares were closed higher by 2.66% to $506.44. Alphabet Class A and Class C shares rose 1.64% and 1.41% to $2,040.36 and $2,052.70 respectively.

Most of these stocks were muted in the after-hours session.

Why It Matters: The Nasdaq had fallen into correction territory this week with the Nasdaq 100 falling 11% from an all-time-high recorded a month earlier.

Siegel noted the upward march of long-term interest rates has not yet stemmed, as per CNBC. 

“The so-called value stocks are going to be sought out for their yield because I think interest rates are still going to be headed much higher here on the long bond,” said the analyst.

He forecast the Dow hitting 35,000 in 2021, which is a level almost 10% above Tuesday’s closing.

Siegel remains bullish, except on technology stocks, and said this “stock market still has a way to go up,” as per CNBC.

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