The economic news today was at best “not terrible.” Initial claims for unemployment for the week showed a job market recovery that has stalled. Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi adjourned their talks for another day without bridging the yawning gap between Republican and Democratic plans for another round of coronavirus stimulus spending.
On Wall Street the reaction was a modestly up day with the Standard & Poor’s 500 closing with a gain of 0.53% on the session.
But I’d like to draw your attention to the return of this market pattern:
On a day when the market as a whole advanced just a bit, technology shares rallied strongly. It was as if, once again, traders and investors were saying that they wanted to own technology shares because companies in that sector would show climbing revenue (and earnings) even if the economy slowed down again.
Let’s use the 0.53% gain for the S&P 500 as a benchmark, ok?
Today Amazon (AMZN) closed up 2.30%. Microsoft (MSFT) gained 1.01%. Netflix (NFLX) was higher by 5.50%. Facebook (FB) gained 2.10%.
And it wasn’t just the expected big names in the sector. Skyworks Solutions (SWKS) gained 4.54%. Chip equipment maker ASML (ASML) was up 3.45%. European chipmakers NXP Semiconductor (NXPI) and Infineon Technologies (IFNNY) were ip 4.9%5% and 7.65%, respectively. Cyber security player Palo Alto Networks (PANW) gained 2.15%.
I’d certainly consider the possibility here that if economic grow slips again as we head into prime flu and coronavirus weather, the technology sector will again lead stocks.Are tech stocks the new hedge against slow economic growth?