Alcoa (NYSE: AA) is no longer a member of the Dow Jones Industrial Average, but that has not changed the company’s status as the starter of another earnings season. The aluminum producer kicks-off second-quarter earnings season Tuesday after the close of U.S. markets.
As is usually the case, technology sector earnings will be widely followed and some exchange traded funds appear to be attempting to price in the potential for some upside surprises from tech companies. To this point in Monday’s session, just 38 ETFs have hit new 52-week highs, but eight are dedicated ETFs or funds that are heavy on the sector, such as the PowerShares QQQ (NasdaqGM: QQQ).
Although QQQ, the NASDAQ-100 tracking ETF, is now slightly lower on the day, the ETF still resides around its highest levels since early September 2000. [Tech ETFs Roar Back to Life]
Bolstered by the resurgence of old school tech names, which remained sturdy even as Internet and social media stocks swooned earlier this year, the sector has been solid this year. The Technology Select Sector SPDR (NYSEArca: XLK) entered Monday with a year-to-date gain of 10% and earlier hit a new 52-week high. [Old Tech ETF Computes New Highs]
“In the technology sector, people will be looking for trends and commentary on enterprise spend to get a handle on the information technology budgets that constitute the revenues of much of the tech sector. An interesting thesis is that companies have put projects on hold while they figure out what part of their IT infrastructure might move to outsourced data centers and other cloud computing strategies. Any commentary or data points that both validates this thesis and shows signs of spending becoming unstuck would be very bullish for the ‘big ugly’ technology names,” said Colombia Management in a piece posted on ValueWalk.
Overall, analysts are expecting 6.2% second-quarter earnings growth for S&P 500 companies, though some have not ruled out the potential for a double-digit surprise. If that surprise does materialize, tech would likely play part in that as the sector is the S&P 500’s largest at a weight of nearly 19%.