Big cap tech drew investors last week as markets struggled with volatile interest rates and fears of contagion to the banking sector. The broader market went on sale early Friday, but solid Apple and Microsoft continued their gains for the week. The S&P 500 was up 2.6% in a week as it closed on Thursday. However, the S&P information technology sector he rose 5.8% and the telecom services sector rose 7.5% over the same timeframe. Strategists warn tech and internet giants could be in trouble again if the Federal Reserve raises interest rates or even keeps them high. Thursday’s futures market priced in strong odds for his quarter-point rate hike next week by the Federal Reserve. But even though technology is vulnerable when interest rates rise, the dramatic volatility in bond yields and concerns about the financial sector have pushed investors to invest in the relatively safe big tech. Big tech companies are benefiting from a flight to quality within the sector. Because these stocks have strong cash flow and reliable earnings. For example, the 2-year US Treasury yield climbed above 5% last week, but this week he’s well below 4%. Friday morning the yield was 4.05%. Falling yields have eased some of the pressure on technology. Investors tend to pay a premium for promises of future earnings growth, so technology and growth names reacted less when interest rates rose. As funding costs rise, the value of these earnings declines. MSFT GOOG 1Y line techs Apple was up 5% week-to-date as of Thursday, while Microsoft was up 11.1% week-to-date at Thursday’s close. Alphabet is up 10.7% and Amazon is up 10.3% in his week. “I think inflation will continue for some time,” said Jeff Kleintop, chief global investment strategist at Charles Schwab. I think it will continue to put pressure on some.” The market could remain volatile, especially if more negative headlines come from the financial sector, strategists said. Shares rose Thursday as investors reacted to news that a consortium of banks had agreed to deposit $30 billion of him with First Republic. But banks were at the epicenter of Friday’s plunge, with traders worried there might be more contagion. The stock market has shown overall resilience in the face of bank concerns since the Valley Bank collapse, he said. “In the big picture, any headline that says, ‘You shouldn’t invest in risky assets like stocks,’ says, ‘You shouldn’t invest in risky assets like stocks,’” Hickey said. It’s holding up,” he said. “What the market says is one thing and what the headline says is another. When there is such a difference, we are always on the side of the market.” “As far as groups go, they’re not cheap, but they’re not outrageously expensive either,” he said. It’s been trading and the sentiment for the stock is pretty negative.It’s a stock that we like here and it could act as a cushion for investors.”But he said Microsoft is on the expensive side. said there is. “Just as Alphabet fell out of favor with his AI strategy, Microsoft became everyone’s favorite in his AI space,” he said. “I think it’s a bit ahead of its time.” Kleintop said it has performed even better in international markets such as Europe. The US likes companies with quality names that give them a lot of cash flow quickly.
As the in-house writer for GallantCEO.com I prefer to remain anonymous as I do not seek anything from my writing only the self gratification of writing for a good cause such as this.