The rotation away from large Nasdaq stocks like Tesla has intensified, resulting in the market’s biggest divergence since the dotcom bubble broke a generation ago.
The SPDR Industrial ETF (XLI) set a new all-time closing high on Friday, while the SPDR Technology ETF (XLK) slid for a third straight week. The divergence follows a new trend of investors shifting toward value stocks that can withstand higher interest rates. They’re also looking for companies that can benefit from faster gross domestic product.
The S&P 500 rose 1.8 percent between Thursday, December 31, and Friday, January 8. It was the biggest weekly gain since late November. planting the index above 3,800 for the first time ever. The Nasdaq-100, Russell 2000 and Dow Jones Industrial Average also hit new records.
The Nasdaq-100 fell 3.1 percent between Friday, August 28, and Friday, September 4. The SPDR Technology ETF (XLK) declined 4.1 percent. Both were the biggest weekly drops since the coronavirus selloff reached a climax in mid-March.
In the last week, companies like Walt Disney (DIS), Allergan (AGN), Electronic Arts (EA) and KLA Tencor (KLAC) beat estimates, only to drift or fall. The tepid response comes amid fears about a renewed trade war with China, plus buyer fatigue after four months of solid gains.
The Market Vectors Semiconductor ETF (SMH) is up about 7 percent in the last week, making it the best-performing major fund in the entire market. Its sharp gains so far in April also put it on pace for its best month in over a decade.
The S&P 500 rose 1.6 percent between Friday, January 25, and Friday, February 1. It was the fifth gain in the last six weeks, with every major sector and index moving higher.