Major information technology stocks and exchange traded funds have weakened after their March highs. Much of this is due to the negative sentiment coming out of prospective major IT purchasing regions worldwide, but the near future outlook is positive.
“Spending on computing hardware and enterprise software, while expected to slow, is still anticipated to expand at mid-single digit paces, as is telecommunications equipment spending. We believe this augurs well for many of the mega-cap names that are typically held in ETFs such as International Business Machines (NYSE: IBM), Apple (NYSE: AAPL) and Oracle (NYSE: ORCL),” S&P Capital IQ wrote in a recent note. [Chart of the Day: Apple and Tech ETFs]
Positive catalysts for the technology sector are on the horizon later in 2012 such as the release of Microsoft Windows 8 and new chips from Intel. [Best ETFs for Sectors in 2012]
Mostly neutral on several sectors, Schwab has changed its view of particular market segments. Schwab’s view remains Outperform on information technology, reports Joyce Hanson for AdvisorOne.
“It’s a barbell approach that has a little bit of a defensive flavor. As we’ve seen in past years when there’s been a downturn, information technology has held up relatively well. They’re increasing their dividend payments and their balance sheets are extremely solid with large cash balances, and businesses are willing to spend first on productivity-enhancing items rather than on labor,” Brad Sorensen, Managing Director and Sector Analyst, Schwab Center for Financial Research, said in the article. [Tech ETFs and the Apple Effect]
Various IT ETFs Rated positive by S&P Capital IQ:
- Focus Morningstar Technology Index (NYSEArca: FTQ)
- PowerShares QQQ (NYSEArca: QQQ)
- Technology Select Sector SPDR Fund (NYSEArca: XLK)
Tisha Guerrero contributed to this article.