Technology Stocks are on the way up and this is pushing the Wall Street Higher. Thanks to the stellar performances from technology stocks, the S&P 500 has moved from 2,000 to 3,000 in the last five years. In fact, it crossed the 3000-mark briefly in the month of July because of how technology has performed lately.
While the major contributions to the S&P 500 have come from the biggest names such as Amazon, Apple, and Facebook, other tech companies such Netflix, Alphabet, and Nvidia have played their part too in the meteoric rise of the Wall Street. In April this year, it was reported that S&P technology stocks had gained 22% since the turn of the year.
In short, U.S equities continue to rise steadily, largely due to the gain experienced by technology stocks. Led by Apple, technology stocks are pushing Wall Street higher and this trend is expected to continue into the future. The trend started gained momentum in August last year and there has been no looking back ever since. Let’s look at how the technology stocks gained and if they are the only thing driving the market.
Where It All Started
In August last year, gains in technology shares pushed the U.S stock indexes higher. The top gainer among the major S&P sectors, technology stocks rose by 0.45 percent. Tech giants such as Amazon.com, Apple, and Google-parent Alphabet experienced gains between 0.7% and 3%.
The tech surge was led by Apple which saw its stock value increase by nearly three percent to take its value to $US1 trillion. This made Apple the first publicly listed company in the U.S to reach the $1-Trillion milestone. Other tech stocks that helped push the Wall Street higher include Facebook with a 2.7% gain, Alphabet with a 0.7% gain, Netflix with gains of 1.8% and Amazon with a gain of 2.1%.
With the rise in the shares of the technology companies, indexes in the U.S stock market opened higher the next day. With an addition of 0.5% or 135 points, The Dow Jones started trading at 24,932 points. There was 0.5% or 14 points increase in the S&P 500 which saw the index start trading at 2,716 points. Nasdaq also experienced gains, increasing 0.6% or 43 points, to open at 7,261 points.
With a gain in shares of 2.1%, e-commerce giant Amazon saw its market value surpass Microsoft and rise to $724 billion. Alphabet—the parent company of Google, opened with a gain of 0.7% to increase its value to $775 billion, which firmly ranks it as second in market capitalization in the world.
Why are Technology Stocks Pushing Wall Street Higher
A lot of people may be interested in knowing why technology stocks experienced the gains that they did. Well, here’s the answer. Technology stocks experienced gains in shares to push Wall Street higher as Apple and Microsoft boosted the tech sector. This happened after Microsoft announced an acquisition and Apple held the annual developers’ conference.
At the conference, Apple launched iOS 12 which is its latest operating system. Soon after, with a 0.8% gain, it provided the biggest boost to the S&P 500 and helped Nasdaq to come close to its mid-March intraday record. The boost to the indexes provided by the technology sector continued into the next few days and during the entire week that followed, the indexes experienced gains.
The $7.5 billion deal signed by Microsoft to buy privately held coding website GitHub and Apple’s developer conference sent the shares of Wall Street skyrocketing. Microsoft was founded as a company that provided developers with the tools they needed. The deal to buy GitHub Inc is another step in that direction. Developers and other stakeholders started anticipating the deal to produce the next generation of developer tools and this has helped push the shares of Microsoft and indexes where they’re listed higher.
Another company that helped increase the technology stocks was Tesla which saw its shares increase by 16.2%. This increase in shares of Tesla was the outcome of quarterly results that convinced investors about the future profitability of the company. Another reason for the stocks rising was Elon Musk, the chief executive of Tesla, apologizing for his behavior on previous earning call.
In the afternoon that followed the deal, the S&P gained 0.41% or 11.14 points to rise to 2,745.76, the Dow Jones Industrial Average increased by 0.665 or 162.38 points and rose up to 24,797.59 while the Nasdaq gained 0.57% or 43.33 points and rose up to 7, 597.55. The S&P technology index also gained, increasing by 0.9%. Of the eleven main S&P indexes, seven were trading higher.
Are Technology Stocks the Only Thing Driving the Market?
You may have this question in your mind right now and it is only right to answer it. Yes, technology stocks have helped but they are not the driving factor behind rising U.S indexes. The country’s trade policy has also influenced the recent rise in equity markets. Not too long ago, U.S stocks declined dramatically after the government announced its plans to increase tariffs on goods imported from China.
However, there was a positive turn of events when the U.S and Chinese governments expressed their desire to start talks in a bid to resume bilateral ties. According to Bloomberg, officials belonging to both governments have signaled that a high-level meeting concerning trade relations could soon take place between the U.S and China.
Although markets in the U.S have remained resistant to the news, the talk of war between the U.S and China—two of the major economies of the world, slowed down the performances of exchanges around the world, including here in the United States. Also, the possibility of a war between the two countries has caused major indexes to hold in a tight trading range.
In spite of such fears, the U.S indexes continue to perform positively. For example, in June, there was a 0.1% increase in the U.S consumer price index. Additionally, Core CPI, with the exclusion of volatile food and energy, increased 0.2% during the same month. Moreover, there was six-year of 2.9% in the twelve-month gain for CPI, which showed the U.S economy is performing better than it has at any time post the 2008-09 recession.
Although tenacious at times, renewed optimism in trading recently is a good sign for stocks and indexes. Whether it is due to technology stocks or something else, the U.S indexes are moving higher, and this trend will continue in the future.
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