Markets have been shaky recently but technology stocks are bucking the trend. Falling bond yields and expectations of rate cuts later this year have boosted the allure of tech.
While the S&P 500 has given up its early-year gains, the tech-heavy Nasdaq 100 index is up 18 per cent. The NYSE Fang+ index, which tracks Facebook, Amazon, Apple, Netflix, Google parent Alphabet and other tech stocks, is up over 35 per cent.
Such strength in the face of broader market weakness is extraordinary. Bespoke Investment notes the Nasdaq 100 was recently technically overbought while the S&P 500 was simultaneously oversold – the first such combination since the dotcom bubble in early 2000. Similarly, the Fang+ index has enjoyed near-record levels of outperformance over the past two months.
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This is partly explained by the awful performance of tech-related stocks in 2022 – Bespoke notes the Fang+ index suffered some of its worst two-month underperformance on record last year. Nevertheless, the extent of the mega-cap tech rebound is impressive. Apple and Microsoft now account for 13.3 per cent of the S&P 500, according to Strategas Securities – the highest level on record.