Technology stocks have led the rally on the U.S. equity market in recent years. However, a sharp sell-off in October means that the Nasdaq Composite has given up almost two thirds of its YTD gains accumulated until end of October. Our new CIO Insights Note – U.S. technology stocks takes a deeper look at this sector to assess recent and likely future trends.
We believe that still-lofty valuations, a deceleration in sales and earnings growth, trade-related risks, along with extended positioning and volatility all argue for our more cautious tactical view on the sector. Against this background, the time has come to consider taking profits on any large overweight positions in U.S. Technology.
But, on a strategic basis, the general appeal of technology as a long-term theme has not diminished. No other sector is likely to play such a key role in shaping our future – especially with regard to global mega trends.
Download this CIO Insights Note as a pdf here.