Macroeconomic Factors Affecting Technology Stocks in 2015




In this series, we will analyze the year-to-date performance of firms in the Technology, Hardware, and Storage subsector and that are a part of the Technology Select Sector SPDR ETF (XLK). As of September 25, 2015, XLK generated year-to-date returns of -2.28% to close at $39.81.

We will analyze the macroeconomic factors affecting the performance of SanDisk (SNDK) and Hewlett-Packard (HPQ) in this series.

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Subsector performance

In the above chart, we can see that Semiconductor Equipment was the worst-performing subsector, generating year-to-date (or YTD) returns of -30.93%, followed by the Technology, Hardware, and Storage subsector and the Integrated Telecommunications subsector at -28.91% and -17.55%, respectively.

Subsectors that have outperformed XLK include Specialized REITs, Internet Software and Services, and Home Entertainment Software with YTD returns of 23.19%, 7.81%, and 47.80%, respectively.

In terms of individual stocks, Electronic Arts (EA) generated maximum YTD returns of 47.80%, followed by Total Systems Services and Altera Corp. at 36.98% and 36.09%, respectively. Yahoo! (YHOO), Micron (MU), and SanDisk (SNDK) generated YTD returns of -42.33%, -57.41%, and -48.09%, 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 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 stocks. The Greek debt crisis, the fall in the Chinese stock markets, and global growth issues have made cyclical tech stocks less attractive to investors and analysts. Semiconductor stocks also bore the brunt of these factors, resulting in a major dip in share prices.


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