The technology sector, the largest sector weight in the S&P 500, has been struggling as of late. Investors looking for this bellwether group to rebound probably should not expect semiconductor stocks and exchange traded funds (ETFs) to stoke that rebound, if it even materializes.
Some technical analysts see the charts of the VanEck Vectors Semiconductor ETF (NYSEArca: SMH) and the iShares PHLX Semiconductor ETF (NasdaqGM: SOXX), which tracks the cap-weighted PHLX SOX Semiconductor Sector Index, as currently imperiled thanks in large part to slack performances from marquee chip names such as Dow component Intel (NasdaqGS: INTC) and Qualcomm (NasdaqGS: QCOM).
The semiconductor industry, though, faces some headwinds. Research firm Gartner anticipates that worldwide shipments of personal computers, tablets and smartphones rose only modestly last year, which could cause chip sales to decline.
Semiconductor weakness comes as investors have been departing technology stocks and exchange traded funds to start 2016. Slumping shares of Apple (NasdaqGS: AAPL) have been a drag on ETFs such as the Technology Select Sector SPDR (NYSEArca: XLK).
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. Chip stocks also make up a healthy percentage of broader tech ETFs’ lineups.[related_stories]