America’s biggest technology stocks have been the crucial ingredients in powering Wall Street’s gains this year as Apple, Alphabet, Microsoft and Facebook drove half of the S&P 500 earnings beat.
The tech sector has notched a dazzling performance this year, roaring higher by 37.1 percent year to date, which is more than double the number-two group, healthcare, which has rallied 18 percent, and better than the broad market, which is up 15.3 percent.
Tech sector earnings grew 22 percent, which is double the rate that analysts forecast. The industry as a whole has accounted for 90 percent of the S&P 500 earnings beat rate.
Profits for the benchmark S&P 500 index climbed 7 per cent year on year in the third quarter, according to Goldman Sachs data reviewing results from the 91 percent of constituents that have reported so far. The rate of growth is two percentage points better than expected.
The development has come as investors have cheered the industry’s consistent sales and profit growth. Goldman’s equities analysts reckon tech industry sales will climb 19 percent this year and 20 percent next year.
Its future is also seen as less closely tied to the success or failure of the Trump administration’s fiscal stimulus programmes, such as corporate tax cuts and infastructure spending. Industrial stocks, which were seen as one of the “Trump trades”, have gained 11.7 per cent this year, less than the broader market.
Meanwhile, a Goldman index of stocks benefitting the most from lower taxes has pulled back relative to the market, after widely outperforming following the 2016 election of Donald Trump.
Frontpage February 7, 2020