NEW YORK : Investors are gravitating toward big technology stocks as banking crisis worries rock U.S. markets, hoping the shares are better positioned to withstand a possible economic downturn and will benefit from a steep drop in bond yields.
Large tech stocks generally screen well on"quality" metrics, such as balance sheet strength and profit margins, heightening their allure when economic uncertainty arises, said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management. The relative strength in tech, the biggest S&P 500 sector with a 28 per cent weighting in the index, has helped take the edge off a broader decline in stocks fueled by fears that financial system disruptions and tighter monetary policy will hurt U.S. growth.
A swift tumble in Treasury yields is also helping boost tech stocks. Tech shares were pummeled in 2022 as the Federal Reserve's aggressive rate hikes drove up Treasury yields, hurting"long duration" assets such as tech stocks.