Latest news with #XLK
Axios
3 days ago
- Business
- Axios
Tech leads stocks to records after bear market scare
The S&P 500 has been on a rollercoaster ride, nearing a new all-time high, only 77 days after dipping into an intraday bear market in April. Why it matters: Historically, a market recovery of this size and speed signals more gains ahead, so forget the prior lows. This relief rally is bullish. By the numbers: Ryan Detrick, chief market strategist at the Carson Group, crunched the numbers. Stocks are up more than 20% from the April 8 lows. A 20% rally in two months has only happened five other times since 1950. In all of those prior cases, stocks were higher 1, 3, 6 and 12 months later. What they're saying: "We think the biggest risk to our view is that we're not bullish enough," Max Kettner, chief multiasset strategist at HSBC, wrote in a note to clients. Investors could be "underestimating the boost from AI and the weaker USD," he points out. That could drive efficiencies across the market and cushion any potential earnings weakness, respectively. Zoom out: What brings the market down tends to bring it back up. In this case: tech stocks. Losses in large-cap tech led the market to its April bottom. Now, XLK, an ETF that tacks the biggest tech names in the S&P 500, has hit its highest level in history. The intrigue: Dan Ives, senior equity analyst at Wedbush Securities, sees the tech rally gaining fuel from the removal of geopolitical risks. "With a weakened Iran and no nuclear capabilities, there is a growing view from tech investors that the opportunity for the Middle East to embrace the tech and AI boom is now on the doorstep being led by Saudi and UAE," he wrote in a note to clients. Reality check: It's not all roses. Market strategists say investors ignore recent headwinds such as trade turmoil and war at their own risk. What we're watching: Marci McGregor, the head of portfolio strategy for the chief investment office at Merrill and Bank of America Private Bank, expects stocks to be choppy in the months ahead.
CNBC
5 days ago
- Business
- CNBC
Tech stocks, including Apple, were safety trade during Covid, but this market is different
Tech stocks have acted like a stock market safe haven at various times in recent years when volatility went up, such as during the Covid pandemic. But a recent slide in the tech stock often considered to be the safest of all, Apple, has raised questions about that role for the market's leading sector. As of last week, Apple was a notable underperformer, down -0.6% over the past two months (approximately 40 trading sessions), according to CNBC research. But that doesn't mean tech hasn't bounced back strongly from the early 2025 tariff-triggered selloff. The SPDR Info Tech Sector Fund (XLK) is up 25% over that period, while the Invesco Nasdaq Trust (QQQ) has produced a similar rally. It's Apple that's no longer acting like the stock that in recent years had seemed to function as the equities market's closest thing to a bond. The recent gap is Apple's worst relative performance to its own sector fund since December 2002, according to CNBC research. It's the only of the so-called "Magnificent 7" tech stocks to recently trade below both its 50- and 200-day moving averages. How are investors playing tech in an up-and-down year for the market? Buying the broad stock market on the dips has worked, and is an inherent bet on tech. Investors have a hefty weighting to tech in S&P 500 index funds and ETFs this year, where the top tech stocks represent over 30% of the index. Amid the recent tariff volatility, the Vanguard S&P 500 ETF (VOO) has bested all other funds in new flows from investors, and in fact, it's on pace to break the record for annual net inflows, a mark it just set last year. It's currently sitting at $82 billion in net inflows in 2025, more than four times as much as the next biggest haul for equity ETFs, the Vanguard Total Stock Market Fund (VTI). Both the Invesco Nasdaq 100 ETF (QQQM) and the Invesco QQQ Trust make the top 10 among all ETFs, with roughly $9 billion and $8 billion in inflows, respectively. The Vanguard Information Technology ETF (VGT) has taken in close to $3 billion. VettaFi director of research Todd Rosenbluth said the broadest bets on a resilient U.S. stock market are also the biggest bets on tech. "I think many people are having tech and AI as part of a broader portfolio, as opposed to leaning in solely onto the technology sector," he said on a recent CNBC "ETF Edge." And he added that investors are for the most part using traditional approaches to hedging stock market risk, with strong interest in fixed income ETFs, especially the shortest-term bonds and notes where they can "earn some income, and not take on much risk," he said. Rosenbluth said it is true that during Covid the tech sector had been seen as a relative safe haven for investors. But in 2020, there was also the sudden surge in reliance on technology for those who were working or attending school remotely, leading to a unique tech sector boom. The tech sector went through a significant downturn in 2022, but it has remained a fairly reliable grower, he said, with the emergence of AI and rise of the chip sector led by Nvidia. "Large-cap tech is a relative safe haven, but we're seeing investors want the benefit of diversification with more traditional defensive sectors," Rosenbluth said. That includes utilities and consumer staples, which have both outperformed the S&P 500 this year, though not by nearly as sizable a margin as tech has. For others who follow tech stocks, any market volatility remains a buying opportunity. Wedbush Securities global head of technology research Dan Ives said on "ETF Edge" that times of geopolitical strife are no different. And he said concerns about the valuation of the sector compared to other sectors have cost investors if that kept them out of tech stocks in recent years. "My view of tech, if you focus just on valuation, you missed every transformational tech stock of the last 20 years. And I believe the market is still massively underestimating what the growth is going to look like for the AI revolution" said Ives, whose firm recently launched an AI ETF branded with his name. "That's why any type of geopolitical events, we always view as opportunities to own these names cheaper, that's kind of always been our view the last 25 years we have covered tech." One investor approach of note this year is certain, Rosenbluth said, regardless of how any single investor approaches tech stocks. "In 2025, investors are getting used to a more volatile time period than they were even a month, or three months ago, more accepting of volatility," he said. Disclaimer
CNBC
5 days ago
- Business
- CNBC
Using options to hedge against a tech decline as sector becomes overbought
The technology sector has been a primary driver of the U.S. stock market's rally in recent years, propelled by optimism surrounding artificial intelligence (AI) and semiconductor demand. However, several technical indicators now suggest overbought conditions, signaling potential risks to the rally. Is it time once again to initiate some hedging strategies? Are technology stocks overbought? Technology stocks, particularly megacap firms such as Nvidia , Broadcom and Microsoft , have driven market gains in 2025. The Technology Select Sector SPDR Fund (XLK) rose 9% in May, outpacing broader indices. In the second quarter, XLK is up nearly 17%, while the S & P 500 has climbed 6.8%. Several technical indicators suggest the recent rally may be getting overextended. We'll examine what three of the most well-known short-term overbought (oversold) indicators — Bollinger Bands, RSI, and MACD — are saying now, review historical multiples and identify an options trade on XLK. Developed by John Bollinger in the 1980s, Bollinger Bands consist of three lines plotted on a price chart: a simple moving average (SMA) and two bands that represent standard deviations above and below the SMA. The standard deviation measures price volatility, so the bands widen during periods of high volatility and contract during periods of low volatility, visually representing the dispersion of prices around the mean. You can examine Bollinger Bands yourself by selecting them from the Studies drop-down menu on the CNBC website. You will observe the XLK exceeded the upper Bollinger Band recently, indicating a potentially overbought condition. Traders and investors utilize Bollinger Bands in conjunction with other indicators, such as the Relative Strength Index (RSI) or Moving Average Convergence/Divergence (MACD), to confirm signals and minimize false positives. It's a bit hard to make out, but the RSI hit the first upper line, indicating potentially overbought conditions in mid-May and again more recently around June 12. There are naturally similarities in the results that technical indicators of this type will reveal, but the MACD indicator also crossed in late May. I am not a technical analyst, but I do incorporate technical signals into a broader fundamental and macroeconomic framework to establish whether there are near-term risks or opportunities. Historical multiples are approaching the upper end of their historical range on several key metrics. In fairness, the investment in AI (CapEx), would reduce free cash flow, but this is occurring in the midst of rising risks in the Middle East. The trade Given these risks, hedging is prudent for investors with significant tech exposure, particularly those concerned about short-term volatility. The tech sector's rally, while supported by AI-driven fundamentals, faces near-term risks from overbought conditions and external pressures. Hedging can mitigate downside risk without requiring investors to exit positions entirely, preserving exposure to potential upside. Because hedging comes at a cost, one must strike a balance between acceptable risk and cost. The 150-day moving average is currently ~$226 and may serve as near-term support, so a hedge below that level that would kick in if support should fail makes sense. For example, the September 225/215 put spread costs ~$1.17 as I write this, and would pay ~7.5:1 if XLK was below the 215 short strike price as of September expiration. That would be a decline of just over 10% and roughly the level from which XLK broke out in early May — and where there is an unfilled gap: Buy 1 Sept. 19 $225 put Sell 1 Sept. 19 $215 put DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
Yahoo
18-06-2025
- Business
- Yahoo
How Is Hewlett Packard Enterprise's Stock Performance Compared to Other Technology Stocks?
Spring, Texas-based Hewlett Packard Enterprise Company (HPE) delivers solutions that allow customers to capture, analyze, and act upon data seamlessly. Valued at $23.9 billion by market cap, the company provides servers, advanced storage products, high-performance computing, AI-driven platforms, and more. Companies worth $10 billion or more are generally described as 'large-cap stocks,' and HPE fits right into that category with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the communication equipment industry. HPE is a trusted IT brand known for reliability and innovation. Its comprehensive product portfolio, including servers, storage, and networking equipment, makes it a one-stop-shop for enterprise needs. HPE's focus on high-performance computing and edge-to-cloud solutions keeps it at the forefront of tech advancements. Trump Is Giving Tesla's Robotaxis a Leg Up Ahead of June 22. Should You Buy TSLA Stock Now? Dear Nvidia Stock Fans, Mark Your Calendars for July 16 The Trump Family Is Betting Big on Mobile Phones. Should Apple Stock Investors Be Worried? Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. Despite its notable strength, HPE slipped 27.4% from its 52-week high of $24.66, achieved on Jan. 22. Over the past three months, HPE stock gained 13%, underperforming the Technology Select Sector SPDR Fund's (XLK) 12% gains during the same time frame. In the longer term, shares of HPE declined 16.2% on a YTD basis and fell 17.4% over the past 52 weeks, underperforming XLK's YTD gains of 3.8% and 4.4% returns over the last year. To confirm the bearish trend, HPE has been trading below its 200-day moving average since late February. However, the stock is trading above its 50-day moving average since early May. HPE's underperformance stems from server segment execution issues and industry-wide challenges, including tariff uncertainty, evolving AI policies, and shifting demand patterns affecting order visibility. The company has implemented corrective measures, such as pricing adjustments and inventory reduction. On Jun. 3, HPE shares closed up more than 2% after reporting its Q2 results. Its adjusted EPS came in at $0.38, down 9.5% year over year. The company's revenue stood at $7.6 billion, up 5.9% year over year. The company expects full-year adjusted EPS in the range of $1.78 to $1.90. In the competitive arena of communication equipment, Cisco Systems, Inc. (CSCO) has taken the lead over HPE, showing resilience with a 10.4% gain on a YTD basis and 43% uptick over the past 52 weeks. Wall Street analysts are moderately bullish on HPE's prospects. The stock has a consensus 'Moderate Buy' rating from the 15 analysts covering it, and the mean price target of $21.36 suggests a potential upside of 19.3% from current price levels. On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
17-06-2025
- Business
- CNBC
Investors are buying defense stocks as Middle East conflict worsens
(This is a wrap-up of the key money moving discussions on CNBC's "Worldwide Exchange" exclusive for PRO subscribers. Worldwide Exchange airs at 5 a.m. ET each day.) Investors are looking for opportunities in defense. They are also exploring the value trade while navigating geopolitical uncertainty from Middle East tensions. Worldwide Exchange pick: RTX Kevin Simpson of Capital Wealth Planning said defense stock RTX is a solid buy because of the conflict between Israel and Iran as well as its current valuation. "This is a 17 [price-to-earnings] multiple, so good value with a growth component. [It] pays a 2% dividend so you are getting paid while you wait," Simpson said. Other names tied to defense and oil, such as Northrup Grumman and Halliburton, also moved higher in the premarket. Simpson said there could be risk in trading on headlines, adding: "This whole space is butting up against all time highs … so you want to look at multiples make sure you aren't chasing something." "But you need to have at least one or two names for a diversified portfolio." Geopolitical uncertainty and the value trade Callie Cox of Ritholtz Wealth Management believes there are opportunities in value stocks, specifically those that offer dividends and are tied to the recent rise in oil. "We're always looking at value stocks because we want to maintain stability and consistency in our client portfolios," Cox said. "Energy stocks are a big component of the value trade. If you think this Iran conflict will end up raising oil prices then you want to be in value stocks." "Dividends are another interesting strategy to think about when growth is slowing and definitely when inflation is moving higher," Cox said. Tech ETF hits all-time highs Mark Hackett of Nationwide sees the Technology Select Sector ETF (XLK) hitting all time highs as a sign of increasing defensive positioning. "When the technical rallies happen investors tend to gravitate towards tech, in general tech has been defensive as well," said Hackett. "But generally when you get through the technical rally we have seen over the last few months, you are going to have to look at fundamentals and frankly the valuations there are very extended." The fund reached record levels on Monday. Several XLK members also hit record highs on Monday, including Palantir and Jabil. The former trades at 229 times forward earnings and is up 87% this year. The latter has rallied 35% in 2025 and trades at a forward multiple of 18.
