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Tech stocks have returned as a safe bet in the (so far) global banking crisis, with UBS buying ailing Swiss rival Credit Suisse.
The tech-heavy Nasdaq Composite ( ^IXIC ) fell less than 1% last month, outperforming the S&P 500’s 3.7% decline, according to Yahoo Finance data (see chart below). Meanwhile, the KBW Bank ETF ( KBWB ), which has been in focus amid the ups and downs of Silicon Valley Bank ( SIVB ), Signature Bank ( SBNY ), and First Republic ( FRC ), is up more than 27 percent.
Tech experts point to a few reasons why money is returning to big tech names.
Wedbush analyst Dan Ives told Yahoo Finance that sector executives have “cleared the deck” in terms of earnings guidance. Cost cutting from the likes of Meta ( META ), Salesforce ( CRM ), Microsoft ( MSFT ) and others has set the tech scene to show improved profits later this year.
“There’s no Sunday night swing with Tech,” Ives added, crediting Switzer for Sunday’s chaotic news flow that struggled around the final game.
The underwhelming bid for tech stocks contradicted last year’s narrative before the March banking collapse.
From Jan. 1, 2022, to Feb. 28, 2023, the Nasdaq composite fell nearly 25 percent — compared to the S&P 500’s 19 percent decline. The tech sector was weighed down by three factors: 1) sales and profits slowing; 2) increasing interest rates that tech stock investors don’t like; and 3) weakening financial perspectives.
As some of these factors have reversed, he said, the sector is becoming popular again. He also said the banking crisis would be a major tailwind, leading the Federal Reserve to pause interest rate hikes.
“The feds are in handcuffs,” Ives added.
Brian Sozzi Yahoo Finance is the editor-in-chief. Follow Sozzi on Twitter @BrianSozzi And on LinkedIn. Tips on the banking crisis? Email brian.sozzi@yahoofinance.com
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