In recent years, the global stock market has become a focal point for investors, and among all the major indices, the Nasdaq Composite stands out for its remarkable performanceParticularly in 2024, the Nasdaq has been breaking records, capturing the attention of countless investorsAt the heart of this surge are technology stocks, which have emerged as the primary driving force behind the index's successMajor players like Apple, Microsoft, Tesla, and Google have not only reported impressive revenues and profits but have also seen substantial increases in their market valuationsWhat underlying factors are fueling this unprecedented rise of tech stocks? Can the anticipation of tax cuts continue to support their upward trajectory and even prolong a bull market?

On a recent Monday, both the Nasdaq and the S&P 500 indices reached record closing highs, buoyed by the performance of technology stocks

As the market soared in November, investors awaited key economic data, including a crucial monthly jobs report set to be released that FridayMeanwhile, the Dow Jones Industrial Average fell, even as the Dow and S&P 500 recorded their largest monthly percentage gains in over a year on Friday.

On that Monday, the technology, communication services, and consumer discretionary sectors each saw gains of about 1%, while other sectors of the S&P 500 experienced declinesTesla’s stock climbed by 3.5% after Stifel raised its price target for the stockRick Meckler, a partner at CherryLane Investments, a family investment firm based in New Jersey, remarked, "We see a market gradually rising during a strong seasonal periodIt’s a tough time for people to exit positions; however, I don’t believe we will see a spectacular finish to this yearThere are too many uncertainties about the future, and no one is clear on what the new government's economic plan will be."

The rise of tech stocks is deeply intertwined with years of industry transformation

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As digital transformation accelerates, especially driven by cutting-edge technologies like artificial intelligence, big data, and cloud computing, technology companies are playing an increasingly pivotal role in the global economyWhether in smart hardware, software development, or high-end chip production, the continuous innovation from tech firms and the consistent demand within the market have created immense investment opportunitiesMany investors are optimistic about the future of technology stocks, increasing their positions, thus propelling the Nasdaq index even higher.

However, the sheer growth of tech stocks alone cannot adequately explain the repeated record highs of the Nasdaq indexIn reality, the expectation of tax cuts has played a critical role in this phenomenonAt the start of 2024, the U.Sgovernment implemented a series of adjustments to corporate tax policies, and the reduction in tax rates became a central focus for the market

Tax cuts not only directly enhance corporate net profits but also provide tech companies with stronger capital accumulation capabilitiesThis policy announcement undoubtedly served as a significant boost for the stock market, especially for tech firms that rely heavily on capital investment and innovation, making the benefits of tax cuts particularly pronounced.

Yet, the pertinent question remains: can the advantages of tax cuts continue to push tech stocks and the Nasdaq index upwards? This question has sparked widespread discussion among market participantsOn one hand, tax cuts have indeed contributed to short-term boosts in corporate earnings and stock pricesHowever, as the effects of tax reductions gradually diminish, whether this growth momentum can be sustained is a crucial issueThe direct benefits from tax cuts may face headwinds from various factors, including global economic uncertainties, rising inflation pressures, and shifts in interest rate policies