{"id":9116,"date":"2023-05-15T19:30:42","date_gmt":"2023-05-15T23:30:42","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/tech-stocks-have-crushed-financials-why-that-may-change\/"},"modified":"2023-05-15T19:30:43","modified_gmt":"2023-05-15T23:30:43","slug":"tech-stocks-have-crushed-financials-why-that-may-change","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=9116","title":{"rendered":"Tech Stocks Have Crushed Financials. Why That May Change."},"content":{"rendered":"
\n
<\/p>\n
<\/p>\n<\/figure><\/div>\n

Technology stocks have recently surged as financials have slumped, with the divide getting about as pronounced as it can get. <\/p>\n

Last week about $4 billion flowed into tech funds, according to
\n Bank of America.<\/span>
\n It was the most since the end of 2021 and not far from a six-year high of about $5 billion. <\/p>\n

\n

Meanwhile, roughly $2 billion flowed out of financial equity funds, the largest outflow in just over\u00a0<\/strong>a year and not a far cry from the largest in about six years, which was just over $3 billion. <\/p>\n

The trend isn\u2019t surprising considering the drop in bond yields, but it will likely moderate from here.<\/p>\n

\u201cI don\u2019t think it\u2019s just buy everything in a big basket of technology,\u201d says Erika Klauer, Technology Equity Portfolio Manager at Jennison Assocaites.<\/p>\n

The
\n Technology Select Sector SPDR ETF
\n (ticker: XLK) has already gained almost 12% since March 1, just before recent banking problems sent the 10-year Treasury yield tumbling. The 10-year is at 3.5%, down from 4% just before the banking mess. <\/p>\n

Lower long-dated bond yields make future profits for fast-growing tech companies more valuable as they expect the bulk of their profits to come many years in the future. Another driver of Big Tech\u2019s performance is the strong growth guidance in first-quarter earnings reports, with the outlook for artificial intelligence driving product enhancements.<\/p>\n

On the other side of the trade are embattled financials\u2014especially regional banks. The
\n SPDR S&P Regional Banking
\n ETF (KRE) has dropped about 41% since March 1. <\/p>\n

Banking revenue has been hammered by a drop in lending. And while\u00a0<\/strong>lifting interest rates on savings accounts would help them keep some depositors, the rates also would lower bank profit margins since banks would pay more interest while earning less on long-term loans.\u00a0<\/p>\n

The point is that investors have already put a lot of money to work in tech and pulled a lot from financials. Now, any good news on banks\u2014or bad news on tech\u2014could incentivize some rebalancing in which investors buy the recent losers and sell the recent winners.\u00a0<\/p>\n

This doesn\u2019t necessarily mean to aggressively pile into banks and completely dump tech. But it might mean buying a few bank shares and easing up on tech is appropriate.\u00a0<\/p>\n

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Technology stocks have recently surged as financials have slumped, with the divide getting about as pronounced as it can get. Last week about $4 billion flowed into tech funds, according to Bank of America. It was the most since the end of 2021 and not far from a six-year high of about $5 billion. Meanwhile, […]<\/p>\n","protected":false},"author":1,"featured_media":9117,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-9116","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nTech Stocks Have Crushed Financials. Why That May Change. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Technology stocks have recently surged as financials have slumped, with the divide getting about as pronounced as it can get. 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