ETF Trends
ETF Trends

Apple (NasdaqGS: AAPL), the largest U.S. company by market value, delivered its widely anticipated earnings report for the December quarter Tuesday, but investors decided to depart exchange traded funds with large weights to the iPhone maker prior to that news.

That includes the Technology Select Sector SPDR (NYSEArca: XLK) follows technology companies taken from the S&P 500 index. In addition to Apple, its largest holding, XLK features large allocations to Microsoft (NasdaqGS: MSFT), Facebook (NasdaqGS: FB) and Alphabet (NasdaqGS: GOOG).

“So far this month, $1.1 billion has left the largest exchange-traded fund tracking technology stocks. That puts January on pace for the biggest monthly outflow since October 2014. Short interest in the ETF also jumped last week to a four-month high, data compiled by Bloomberg and Markit Ltd. Show,” reports Joseph Ciolli for Bloomberg.

Investors have grown increasingly concerned over the company’s iPhone sales growth, especially with China experiencing an economic slowdown. ETF investors will also have to keep a close eye on AAPL as the company makes up double-digit weights in most broad tech-sector ETFs

Facebook (NasdaqGS: FB) is slated to reveal earnings after the close on Wednesday, January 27. Investors will get a glimpse into how the company’s Instagram acquisition is doing for its ad revenue business.

Microsoft reports earnings on Thursday while Google parent Alphabet delivers results next Monday, Feb. 1.

“Technology stocks in the Standard & Poor’s 500 Index have plunged 8 percent in 2016 after seven straight years of annual gains. Their change in fortune mirrors a reversal in momentum stocks. The group, which helped power the bull market rally in equities, have been out of favor in 2016. A momentum ETF, in holds Apple as its the biggest component, has tumbled 8.1 percent this year, trailing the S&P 500,” according to Bloomberg.

Equal-weight ETFs do not feature the large allocations to tech titans such as Apple and Facebook that are found in traditional tech funds, meaning investors can experience less downside when the largest tech names retreat. XLK was in the top half of the sector SPDR ETFs in terms of annual gains last year.

Technology Select Sector SPDR

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.