Tech stocks surged on Thursday as the latest CPI release shows inflation eased by more than forecasted in October.
While technology companies are seeing the most impressive gains, all sectors of the U.S. economy are increasing on hope the Fed could slow interest rate hikes, with rates already reaching the highest level since 2008.
The October consumer price index rose 0.4% from the previous month, the Labor Department said in an economic news release Thursday. Notably, this was below economists’ expectations for an increase of 0.6%. Inflation rose 7.7% in October year over year – below projections for an increase of 7.9%.
The better-than-expected reading on inflation was embraced by markets. The Dow Jones Industrial Average added more than 800 points within the first hour of trading, while the broader S&P 500 jumped even higher, gaining more than 4%. The Nasdaq Composite, which is particularly sensitive to higher interest rates, soared more than 5.5% in the first 60 minutes of the session, Kiplinger reported.
Investors looking to reallocate funds to the technology sector should consider the Invesco S&P 500 Equal Weight Technology ETF (RYT), which is based on the S&P 500 Equal Weight Information Technology Index.
The S&P 500 Equal Weight Information Technology Index covers the following industries: internet equipment, computers and peripherals, electronic equipment, office electronics and instruments, semiconductor equipment and products, diversified telecommunication services, and wireless telecommunication services.
RYT is different from cap-weighted ETFs offering exposure to tech stocks because its underlying index utilizes an equal weight methodology, meaning that component companies receive equal allocations at each quarterly rebalance. This results in exposure that is considerably more balanced than other alternatives, and a methodology that some investors believe will add value over the long haul.
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