In this series, we’ll analyze the YTD (year-to-date) performance of the semiconductor subsectors in the Technology Select Sector SPDR ETF (XLK). As of September 18 2015, XLK generated YTD returns of -1.21% to close at $40.77. We’ll try to analyze macroeconomic factors affecting the performance of Texas Instruments (TXN), Microchip (MCHP), and Analog Devices (ADI) in this series.
In the above chart, we can see that the technology, hardware, and storage subsector was the worst-performing subsector, generating YTD returns of -26.21%. It was followed by semiconductor equipment and integrated telecommunications at -24.87% and -17.06%, respectively.
Subsectors that have outperformed XLK include specialized REITs, internet software and 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) has generated maximum YTD returns of 49%, followed by Total Systems Services and Altera at 36.37% and 36.19%, respectively. Yahoo (YHOO), Micron (MU), and SanDisk (SNDK) have 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. ETF prices have also fallen. Compared to 2Q14, the technology sector is expected to see lower earnings on a year-over-year basis. While this sector saw 6.2% growth in earnings for 1Q15, it’s expected to fall by 4.9% in 2Q15.
Other macroeconomic factors have affected tech 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, seeing a major dip in share prices.