Tech Stocks Stage Dramatic Reversal Higher
March 02 2020 - 4:58PM
Dow Jones News
By Gunjan Banerji
The S&P 500's technology sector soared past the broader
market Monday, a sign of the group's resilience after the worst
Wall Street selloff since the financial crisis.
The tech sector, which contains shares of cloud companies and
software providers, gained 5.7%, far outpacing the broader market's
4.6% jump. Additionally, the sector has continued to outperform the
index this year. It is one of two sectors in the S&P 500 that
turned positive for the year, rising 1.6% in 2020. The S&P 500
lurched higher Monday but remains down about 4.4% this year.
Some analysts remain confident in the group's relative strength,
wagering that a handful of technology firms will keep surging. Many
investors had bet earlier this year that tech heavyweights would be
more shielded from the effects of an economic downturn than other
corners of the market.
Daniel Ives, an analyst at Wedbush Securities, considers
Microsoft Corp., Apple Inc., Tesla Inc. and Adobe Inc. among the
top names to hold during the market volatility, which has been
spurred by fears of the spreading coronavirus. The coronavirus can
hurt some tech companies' supply chains and stoke uncertainty about
demand, but doesn't overshadow the group's long-term potential, he
wrote.
"With this backdrop our playbook/strategy is not to hide under
the covers in markets like this, watch the red screens with frozen
fear, and let the uncertainty of the coronavirus outbreak cloud our
bullish longer term view of these transformational tech names and
themes for the coming years," wrote Mr. Ives.
Still, last week's selloff showed how the technology darlings
that helped power the S&P 500 higher for much of 2020 can
quickly drag it lower. Investors fled some of the top momentum
trades during the rout.
Apple was the biggest contributor to the S&P 500's negative
total return for 2020 through Friday, according to S&P Dow
Jones Indices, accounting for almost 7% of the slide. The S&P
500's total return through Friday was minus-8.3%.
Its fortunes turned on Monday. Apple was one of the day's
best-performing S&P 500 stocks, jumping 9.3%, its biggest
one-day gain since 2008.
Write to Gunjan Banerji at Gunjan.Banerji@wsj.com
(END) Dow Jones Newswires
March 02, 2020 16:43 ET (21:43 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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