Technology Sector ETFs Are on a Roll | ETF Trends

Technology sector exchange traded funds are among the best performers in the recent rebound, with tech stocks posting their best five-day run in seven-and-a-half years, as monetary policy and Mexico trade helped support the risk-on attitude.

The widely observed Technology Select Sector SPDR ETF (NYSEArca: XLK), which covers the technology and telecom sector of the S&P 500 Index, has increased 9.0% over the past week, reflecting its best performance since October 2011.

The surge in the technology sector has been attributed to an end to threats of tariffs on Mexican-made goods imported to the U.S., along with growing optimism over an interest rate cut out of the Federal Reserve. Meanwhile, many remain hopeful that the U.S. and China can get over their differences and come to an agreement on trade, which would further bolster the global outlook.

The strength in the tech segment has been particularly noticeable as many argued that the fundamental picture for tech firms is widely seen as stable regardless of rates and trade, the Wall Street Journal reports.

“Many of the companies are making good money, so the momentum and leadership remains there,” François Bourdon, global chief investment officer at Fiera Capital, told the WSJ.

Citing data from International Data Corp., Salesforce pointed out that global spending on technologies and services to move companies into the digital age is expected to reach $1.8 trillion by 2021.

The tech rally may also came off the heels of a major sell-off in the tech sector after regulatory investigations into Google parent Alphabet Inc. and Facebook Inc. sent the tech-heavy Nasdaq Composite into correction territory, or 10% lower from its May record on June 3.

Semiconductors, which have been among the heaviest hit in the wake of the U.S.-China trade war, has also contributed to the rebound. The iShares PHLX Semiconductor ETF (NasdaqGM: SOXX), which tracks the widely observed PHLX SOX Semiconductor Sector Index, also gained 8.8% over the past week.

For more information on the tech segment, visit our technology category.