U.S. technology and growth stocks have taken the market’s reins in recent weeks, pausing a rotation into value shares as investors assess the trajectory of bond yields and upcoming earnings reports. Technology has been the top-performing S&P 500 sector in April, rising 8% versus a 5% rise for the benchmark index. Big tech-related growth stocks in other S&P 500 sectors such as Amazon Inc, Tesla Inc and Google-parent Alphabet Inc have also charged higher.
The gains have followed a months-long rotation in which tech stocks were outpaced by shares of banks, energy companies and other economically-sensitive names that have surged since breakthroughs in COVID-19 vaccines late last year. The increases in many of these so-called value stocks have slowed lately, while U.S. Treasury prices have come galloping back in April after a sharp first-quarter sell-off. This suggests that some investors may have already priced in a rapid growth spurt that is showing up in economic data. “Tech and growth has started to pick up a little bit because people are getting a little more cautious,” said Lindsey Bell, chief investment strategist at Ally Invest. “Investors are in this wait-and-see mode … at least until earnings get underway.”
