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What’s Driving the Technology Sector?

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Technology sector

The Technology Select Sector SPDR ETF (XLK), which tracks the performance of the technology sector, returned nearly 0.4% in March 2017. Apple (AAPL), Microsoft (MSFT), and Facebook (FB) returned nearly 2.7%, 1.4%, and 3.3%, respectively, in March 2017.

Among the various sectors of the S&P 500 Index, the technology sector and the consumer discretionary (XLY) sector provided positive performances in March 2017. However, the energy sector (XLE), the healthcare sector (XLV), and the industrial sector (XLI) were in negative territory in the same month. As we discussed in a previous part of this series, the financial sector emerged as the biggest loser in March 2017.

The positive earnings growth in major technology stocks drove the technology sector’s movement. On February 15, 2017, Trump met with CEOs of various sectors such as technology (XLK), healthcare (XLV), and retail (XRT). He told them his administration is focusing on promoting economic growth.

According to billionaire investor Warren Buffett, innovation and productivity will play a major role in the advancement of the economy. As the world (ACWI) (VTI) moves toward cloud-based computing systems, technology stocks such as IBM (IBM) and Microsoft (MSFT) could benefit.

The possibility of lighter regulations for businesses might further drive market movement. A possible corporate tax cut could also be an important driver and could boost corporate earnings. Companies in the technology, financial, energy, and healthcare sectors would benefit from these changes.

In the next part of this series, we’ll analyze how the energy sector performed in March 2017 and what to expect in April.

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