“Although market breadth is still fairly solid, weakness in small stocks and the economically sensitive transportation sector counterbalance it,” reports Michael Kahn for Barron’s. “Fortunately for the bulls, leadership by technology and consumer discretionary is still in place. These are some of the usual suspects that lead when the market is strong. The financial sector is usually in that group, too, but it has fallen fairly sharply.”
XLK and other tech ETFs could also be benefiting from rising interest rates. While income-related equities have traditionally demonstrated the most vulnerability in the year with rates on the rise, the energy, technology and health care sectors have historically outperformed on average relative to the markets, according to Fidelity Investments.
“Tech and consumer discretionary are beating the market, while financials are neutral with negative implications,” according to Barron’s. “Investors looking to put money to work in the market would be best served by prospecting in tech and consumer discretionary.”
For more information on the tech sector, visit our technology category.
