U.S. equities and stock exchange traded funds were slightly higher Wednesday as surging technology shares helped offset losses in the plunging energy sector.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEARCA:SPY), iShares Core S&P 500 ETF (NYSEARCA:IVV) and Vanguard 500 Index (NYSEARCA:VOO), were 0.3% higher Wednesday.
Technology company shares in the S&P 500 rose 1.1% as U.S. markets reopened after the Independence Day celebrations. The tech segment has come under pressure in recent weeks as traders trimmed holdings on concerns over lofty valuations in the high-flying sector this year.
Analysts, though, expect tech companies will continue to lead earnings growth in the S&P 500 for the second quarter as we head into earnings season, the Wall Street Journal reports.
“In a world of muted growth, tech stocks can still be attractive for delivering attractive rates of earnings growth … However, because of the positioning around tech, there is to be expected a period of consolidation,” Marcelle Daher, senior managing director, asset allocation at Manulife Asset Management, told Reuters.
Meanwhile, energy company shares in the S&P 500 declined 2.2% after an eight-session winning streak, their longest since 2010, as West Texas Intermediate crude oil futures plummeted 3.6% to $45.4 per barrel on rising OPEC exports and a strengthening U.S. dollar.
The Federal Reserve indicated it will continue to raise interest rates despite muted inflation levels, which they believe will be temporary and likely to rise over the long run to their targeted 2% level, reports Jeff Cox for CNBC.
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The Fed raised its benchmark rate target a quarter point at the recent meeting and outlined plans to cut its $4.5 trillion balance sheet of bond holdings.
Fed officials also warned about greater risk in the equities market, especially in a prolonged bullish environment.
FOMC members “suggested that increased risk tolerance among investors might be contributing to elevated asset prices more broadly; a few participants expressed concern that subdued market volatility, coupled with a low equity premium, could lead to a buildup of risks to financial stability.”
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