Given all the wild volatility and the hair-raising over the fate of bank stocks, the average person on the street would probably think the stock market was going down this week. But not so: the S & P 500 rose 2.6%. You can thank the performance of tech stocks, where the bulls once again took the reins. Much of the S&P 500 is under water this week, but not tech and its tech-like cousins: S&P Sectors This Week: Banks, down 7.3% Energy, down 5.7% Materials down 2.1% Industrials up 1.0% Health care up 2.5% Technology up 5.8% Communications services up 7.4% Technology and communications services together make up about 35% of the S&P 500, so if these two sectors make big moves, the entire S&P 500 moves with it. It can also increase the P index. All the biggest tech stocks posted big gains this week: AMD 17%, Meta Platforms 14%, NVIDIA 11% Alphabet, 11%, Microsoft, 11%, Intel, 11%, Amazon, 10%, Apple, 5%, but the tech rally is broader than that of mega-caps. Thematic Technology ETFs, which focus on a small part of the technology market, also rose: ARK Innovation ( ARKK ) up 8.9%, First Trust Internet ( FDN ) up 7.2% and Semiconductors ( SMH ) up 5.8% , cloud computing ( WCLD ) rose 5.9%. % Social Media (SOCL) Up 5.2% Robotics/Artificial Intelligence Up 3.0% What’s Happening? Alec Young, chief investment strategist at MAPsignals, told me that tech bulls are “doubly expecting a rate hike” from the Federal Reserve, with bulls expecting the Fed to raise rates when the next meeting ends on March 22, but that could happen. Last. This makes some sense. The big risk for tech stocks is that the Fed continues to raise rates, and any sign that the trend may be reversing is positive for the sector. The market believed it. Fed futures, which are futures contracts based on where the federal funds rate is likely to be, are now priced on the possibility that the Fed will start cutting rates in the middle of this year. That’s a big change from two weeks ago, when the Fed was expected to raise rates and keep them high for at least the rest of the year. However, this is a long way from 2020, when the Fed is pouring money into the system. Despite the bailout for banks, the Fed is still looking to restore liquidity. “I think a lot of people think we’re going to have ARK-type lightning in a bottle for stocks again, but I think 2020/21 is very different than it is now, even with the dove campaign,” Securities Academy’s Peter Tchir told me.
Tech stocks are driving the market higher, but it all depends on the Fed now