Broker Check
THE WORD ON WALL STREET: TECHNOLOGY

THE WORD ON WALL STREET: TECHNOLOGY

| November 07, 2017
Share |

The first snow falls down on my last blooming flowers. My sons are staring at their screens as I type. I occasionally look out the window to think - a la Carrie Bradshaw.

Is it any wonder tech stocks are posting such good numbers?

Our modern lives depend on tech more than ever. At the office today, we spent a good part of the day working on the tech side of running my investment firm. I have people working for me remotely – not only here in Minneapolis, but in Omaha, New York City, and across the pond. Technology allows for communication no matter the location or time zone.

My son posts his projects throughout the day at school and I can log in and see the work he’s doing practically in real time.

Yesterday, I tried to take the day off but probably sent 20 emails back and forth from my trusty iPhone. It’s getting harder and harder to unplug.    

Our lives are increasingly ruled by technology.

With that in mind, let’s move to markets because tech is moving markets in a big way. 

It’s earnings season!

Before the November/December holiday season begins, late October is an important season in the investment world. Earnings season starts after quarter-end (September 30th). Many large companies post their quarterly results and analysts review them and investors adjust their positions by buying and selling accordingly. This moves markets.

Take a look at the chart below and notice the stratospheric rise of tech stock prices. Now -- consider how you engage with these big tech companies in your daily life.

Stock Price Increase For Technology Sector Companies

Data as of Friday, October 27, 2017

 

Year-to-Date

Friday’s Change

Facebook

54.61%

4.25%

Amazon

46.82%

13.22%

Apple

40.78

3.58%

Microsoft

34.87%

6.41%

Twitter

33.01%

6.75%

Alphabet (Parent Co. of Google)

32.06%

4.8%

XLK – Technology Select SPDR Fund (ETF)

29.32%

2.69%

NASDAQ Composite (heavily weighted toward IT companies)

24.49%

2.2%

S&P 500

15.29%

.81%

We are dependent on technology more than ever – whether in school, work, or in our personal lives and this correlates directly to the stock market’s winning streak.

Did you know that the technology sector makes up almost 25% of the U.S. equity market? It is a strong contributor to the broader market’s banner year. The S&P 500 is up over 15% YTD as of November 2nd.  

As we edge closer to year-end, investors have more than earnings to consider. Here are some additional factors that have the potential to effect markets:

  • Central Bank Policy - Several of the world’s central banks met this week and the U.S. Federal Reserve just announced it will hold its benchmark interest rate target between 1% and 1.25%. A December interest rate hike is expected. The Bank of England, however, raised rates this week for the first time in 10 years from .25% to .5%.

  • Fed Chairperson Nomination - President Trump nominated Jerome Powell. Powell will take Janet Yellen’s place in February when her term is complete. His leadership will effect markets and it is anticipated that he will continue to normalize rates in a slow and steady manner.

 

  • Jobs Numbers – The U.S. Dept. of Labor released October’s employment numbers today and it was the lowest unemployment reading since December 2000 at 4.1%. U.S. employers also added 261,000 new jobs which is the highest pace of job growth in more than a year.

 

  • Tax Reform – The House Republicans proposed a new tax reform bill this week. The “Tax Cuts & Jobs Act” would lower the number of tax brackets from seven to four, repeal the alternative minimum tax (AMT) and increase the child tax credit to $1600. The bill would also repeal the estate tax beginning in 2024. It would permanently lower the corporate tax rate to 20% but also would add a $500,000 cap on the home interest deduction. Whether the long anticipated effects of tax reform are already baked into the stock market’s upward trajectory is subject to debate.

In closing, markets are soaring to new heights buoyed significantly by the tech sector. Be cautious in your investment perspective. The modern era can create a dangerous psychology of FOMO (fear of missing out) and when markets eventually correct, you don’t want to be caught SOL. 

Post-note: Apple just released earnings and its quarterly revenues increased 12% from a year ago. Considering the fact that people are currently standing in line around the world for the highly coveted iPhone X (and highly priced at $1000), Apple is poised to pull the tech sector even higher. ­­

 :::

Securities offered through Securities America, Inc., a Registered Broker/Dealer, Member FINRA/SIPC, Suzanne Abrams, Registered Representative. Advisory services offered through United Advisors, LLC, a SEC Registered Investment Advisory Firm, Suzanne Abrams, Investment Advisor Representative. United Advisors, LLC, Lundeen Abrams Advisors and Securities America are unaffiliated.

*The opinions and forecasts expressed in this piece are those of the author and may not actually come to pass.  This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan.  Past performance does not guarantee future results.

All material contained herein is for informational purposes only. This is not a solicitation to offer investment advice or services in any state where to do so would be unlawful. Past results are no guarantee of future results and no representation is made that a client will or is likely to achieve results that are similar to those shown. Please refer to disclosure document for additional information and risks.

 

 

 

Share |