Macroeconomic Factors Affect Technology Stock Performance in 2015




In this series, we’ll analyze the YTD (year-to-date) performances of the semiconductor subsectors in the Technology Select Sector SPDR ETF (XLK). As of September 18, 2015, XLK generated YTD returns of -1.21%, closing at $40.77.

We’ll also try to analyze macroeconomic factors affecting the performances of Micron Technology (MU), Intel Corporation (INTC), and Linear Technology Corporation (LLTC) in this series.

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Subsector performances

In the above chart, we can see that Technology, Hardware, & Storage was the worst performing subsector, generating YTD returns of -26.21%, followed by Semiconductor Equipment and Integrated Telecommunications, which generated -24.87% and -17.06%, respectively.

Subsectors that have outperformed XLK include Specialized REITs, Internet Software & Services, and Home Entertainment Software, with YTD returns of 25.93%, 10.49%, and 49.04%, respectively.

In terms of individual stocks, Electronic Arts (EA) generated maximum YTD returns of 49%, followed by Total Systems Services and Altera Corporation, at 36.37% and 36.19%, respectively. Yahoo! (YHOO), Micron (MU), and SanDisk Corporation (SNDK) generated negative YTD returns of -39.14%, -55.73%, and -46.22%, respectively.

Choppy trading since 2Q15

Since the 2Q15 earnings season, the technology sector has seen choppy stock trading. ETFs have also seen a fall in prices. Compared to 2Q14, the technology sector is expected to see lower earnings on a YoY (year-over-year) basis. While this sector saw a 6.2% growth in earnings for 1Q15, the sector is expected to fall by 4.9% in 2Q15.

Other macroeconomic factors have affected tech (technology) stocks. The Greek debt crisis, the fall in the Chinese stock markets, and global growth issues have made cyclical tech stocks not so attractive to investors and analysts. Semiconductor stocks have had to bear the brunt of these factors thereby seeing a major dip in share prices.


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