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Technology stocks are rallying again as interest rates fall and fundamentals improve.
The S&P 500 rose 3.5 percent in March, while the Nasdaq-100 surged 9.5 percent. That 6 point lead by the Nasdaq was its widest margin of outperformance since early 2009, according to TradeStation data.
Interest rates remain a key driver. Treasury yields fell sharply last month as the collapse of Silicon Valley Bank spurred fears across financial markets. The Federal Reserve reversed early signals for more tightening and suggested rates are near their peak. It could be the opposite of early 2022, when surging yields and an increasingly hawkish Fed hammered growth stocks.
At least two fundamental trends also boosted sentiment. First, March saw major announcements related to Artificial Intelligence (AI) from companies like Microsoft (MSFT), Alphabet (GOOGL) and Adobe (ADBE). Excitement about AI not only gave tech investors a new area for optimism beyond established markets like cloud and advertising. It also lifted semiconductor stocks like Nvidia (NVDA) and Advanced Micro Devices (AMD), whose products will be needed to power the vast computing needs of AI.
A second narrative was improving profitability after companies like Salesforce.com (CRM) and Meta Platforms (META) slashed jobs. META additionally benefited from hopes that lawmakers will ban rival TikTok.
Intel (INTC) could also be showing signs of a turnaround after announcing new chips will be available ahead of schedule. That was welcome news from a company that’s struggled with product delays for years. It also made the once-mighty tech stock the top performer in the S&P 500 last month.
| Top Gainers in the S&P 500 Last Month | ||
| Intel (INTC) | +31% | New server chips will be available sooner than expected. That spurred hopes of a turnaround in the struggling tech name. |
| First Solar (FSLR) | +29% | The green-energy company reported strong quarterly results and guidance, supported by government tax credits. |
| Advanced Micro Devices (AMD) | +25% | Third Point built a position in the semiconductor stock, followed by AI excitement. |
| Salesforce.com (CRM) | +22% | Earnings, revenue and guidance beat estimates. The software company also focused on profitability and AI amid pressure from activist investors. |
| Meta Platforms (META) | +21% | The parent of Facebook rose as job cuts boosted profits and rival TikTok faced pressure on Capitol Hill. |
| Top Gainers in the S&P 500 Last Month | ||
| First Republic Bank (FRC) | -89% | The collapse of Silicon Valley Bank weighed on the California lender, which also had a large proportion of uninsured deposits. |
| Zions Bancorp (ZION) | -41% | The Salt Lake City-based lender fell as anxiety swept regional banks. |
| Comerica (CMA) | -38% | The Dallas bank fell with other regional lenders. |
| Charles Schwab (SCHW) | -33% | The brokerage fell on worries about its potential to lose deposits. |
| KeyCorp (KEY) | -32% | The Cleveland-based lender fell on lower guidance and turmoil in the banking sector. |
| Technology | +11% |
| Communications | +8.4% |
| Utilities | +4.2% |
| Consumer Staples | +3.7% |
| S&P 500 | +3.5% |
| Consumer Discretionary | +2.7% |
| Health Care | +1.8% |
| Industrials | +0.2% |
| Energy | -1% |
| Materials | -1.4% |
| Real Estate | -2.2% |
| Financials | -10% |
Below are some key economic events from last month.
Below are some noteworthy commentaries.
| Product | Current Month | Expiration | Next Month | 1-Mon% |
| S&P 500 E-Mini (@ES) | ESM23 (June) | 6/16/23 | ESU23 | +3.2% |
| Nasdaq-100 E-Mini (@NQ) | NQM23 (June) | 6/16/23 | NQU23 | +9% |
| Dow Jones E-Mini (@YM) | YMM23 (June) | 6/16/23 | YMU23 | +1.6% |
| Russell 2000 E-Mini (@RTY) | RTYM23 (June) | 6/16/23 | RTYU23 | -5.3% |
| Date | Event | What to Watch For |
| Fri 4/7 | Non-farm payrolls | Job growth, wages and unemployment. Will recent gains be revised lower? |
| Wed 4/12 | Consumer prices, Fed Minutes | The consumer price index (CPI) is an important inflation report. Minutes from the last Fed meeting could provide clues on monetary policy. |
| Fri 4/17 | Retail sales, earnings begin | Retail sales are due in the premarket. JPMorgan Chase (JPM) and Citi (C) are the first major companies to report quarterly results. |
| Tue 4/18 | Housing starts, building permits | Will the lower interest rates boost the housing market? |
| Thu 4/27 | Gross domestic product | The first of three reports on economic growth in the first quarter. |
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