Technology Sector Rallies as Traders Chase Year-End Momentum

by Warren Seah

Shares of technology companies have experienced a surge as traders continue to pursue year-end momentum in the sector. This rally has been further bolstered by reports that President Biden and Chinese leader Xi Jinping are set to meet next week for a summit aimed at managing their extensive rivalry. Of particular concern are disputes over trade in high-tech goods with military applications.

According to one strategist, this rebound in mega-cap technology stocks reflects a new perception of their risk profile. These prominent tech giants, often referred to as the ‘Magnificent Seven,’ are increasingly seen as stable entities capable of providing support in turbulent market conditions and a challenging economy. Quincy Krosby, chief global strategist at brokerage LPL Financial, explains, “They have rock-solid balance sheets, they generate cash, they are at the forefront of the most innovative technologies underpinned by strong advancements in artificial intelligence, and they are increasingly seen as a defensive move in a difficult market.”

Microsoft is one such company that has benefited from this trend, with its stock rising over 2% to reach new all-time highs. Year to date, Microsoft has surged by more than 53%, adding an impressive $900 billion to its market capitalization in the span of just ten months. Even Apple, despite recent concerns regarding a lackluster iPhone launch and backlash against its products in China, has come within 5% of its own all-time high.

Furthermore, the positive sentiment has also extended to other sectors. Yelp, a popular restaurant-review website, saw its profit skyrocket more than sixfold in the latest quarter, leading to increased investor interest.

As the year comes to a close, the technology sector continues to captivate traders who are eager to capitalize on its upward momentum. With ongoing developments in global relations and an increasingly favorable perception of tech giants’ resilience, it seems that these companies are positioned for further success.

Published by Rob Curran

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