Rotation out of tech stocks driven by technical factors and shift in narrative, expected to continue

From Investing.com: 2024-07-21 04:31:02

Analysts state that the recent rotation out of tech stocks is not due to a fundamental deterioration in the industry’s outlook, but rather to technical factors and a shift in the narrative. June data indicates a “goldilocks” scenario, prompting Fed officials to consider rate cuts. Odds of a Trump victory have increased, resulting in a rush to buy cyclical and value stocks while selling tech and momentum stocks.

The rotation trade is expected to continue in the short term, supported by technical factors and positive macroeconomic news. However, analysts caution that this trade is relative rather than absolute, and tech stocks may face challenges in the earnings season due to high expectations and crowded positions. Companies like ASML and enterprise tech firms may be impacted by these trends.

Vital Knowledge believes that while the rotation trade may persist, the broader macroeconomic narrative could lead to disappointment in the future. Concerns include growth prospects, the potential impact of a second Trump term, and the pace of policy easing. These factors could affect the performance of tech stocks and the overall market.



Read more at Investing.com: Why has there been a rotation and can it continue? By Investing.com