As the world becomes increasingly technology-driven, tech stocks will continue to dominate markets. Seeking Alpha has a brief overview on this sector:
Technology shares continue to post the strongest trend performance for US equity sectors, based on a set of ETFs ranked by one-year return. Although most sectors are posting year-over-year gains, the annual pace for tech remains notable for its outsized advance vs. the rest of the field.
Technology Select Sector SPDR (NYSEARCA:XLK) is up a strong 35.8% for the year through Wednesday (Jan. 3). The current gain is close to the ETF’s highest one-year total return since the recession ended in 2009 (At one point in last year’s fourth quarter, XLK’s rolling one-year change briefly accelerated to just under 40%, a cyclical peak for the post-recession period.).
XLK’s current upside momentum for the one-year gain is well above the number-two performer: stocks in the materials sector. The Materials Select Sector SPDR (NYSEARCA:XLB) is up 25.9% on a total return basis over the past 12 months – a solid increase, but no match for tech’s surge.
Although all but one of the 11 sectors are posting one-year gains, only five are beating the broad market, based on the SPDR S&P 500 (NYSEARCA:SPY), which is currently posting a 22.4% total return for the trailing one-year period.
The lone sector with a negative one-year trend at the moment: telecom. The Vanguard Telecommunication Services (NYSEARCA:VOX) was down 9.5% at Wedneday’s close vs. the year-earlier level. In fact, VOX’s rolling one-year total return has been consistently negative every day since Dec. 5.
The performance chart below presents a visual summary of tech’s dominance in recent history. Although most sector trends are positive, XLK’s run (black line at top of graph) stands apart as unusually bullish.