By Amrith Ramkumar
Technology stocks just posted their best six-day stretch in 7 1/2 years, as investors embrace monetary- and trade-policy shifts widely perceived as supporting higher prices.
After a dismal May, the S&P 500 information-technology sector has rebounded nearly 9% in the past six sessions, its best such performance since October 2011, according to Dow Jones Market Data. The rise has been driven by the end of threatened U.S. tariffs on Mexican imports, alongside optimism that the Federal Reserve will soon lower interest rates. Many analysts remain hopeful that the U.S. and China will reach an agreement on trade, an outcome some say would bolster the outlook for the global economy.
The bounceback has been strong in part because the fundamental picture for tech firms is widely perceived to be strong regardless of rates and trade. The technology sector is up 24% for the year.
"Many of the companies are making good money, so the momentum and leadership remains there," said François Bourdon, global chief investment officer at Fiera Capital.
Boosted by the technology rebound, the S&P 500 climbed for five consecutive sessions through Monday, pulling within 2% of its April 30 record. The broader index inched lower Tuesday as the tech sector eked out a sixth consecutive advance, rising less than 0.1%.
The group rallied to start the week after business-software firm Salesforce.com Inc. agreed to buy data-analytics platform Tableau Software Inc. for more than $15 billion in stock. Global spending on technologies and services to move companies into the digital age is expected to reach $1.8 trillion by 2021, Salesforce said, citing data from International Data Corp.
The tech sector's rally has come just days after regulatory investigations into Google parent Alphabet Inc. and Facebook Inc. sent the tech-laden Nasdaq Composite into correction territory, down more than 10% from its May record, on June 3. In the six sessions since then, the Nasdaq has advanced 6.7%.
Microsoft Corp., the world's largest public company, has helped drive that rebound, with its market value once again exceeding $1 trillion. Microsoft, Facebook, Alphabet, Apple Inc. and Amazon.com Inc. have added $346 billion in market value over the past six sessions, after shedding $515 billion from the end of April through June 3.
Semiconductor companies that have been caught in the crosshairs of the U.S.-China trade fight because of China's demand for computer chips are also contributing. The PHLX Semiconductor Index rallied 2.5% Monday on trade optimism, outpacing the broader sector's 1% advance. The group has been volatile this year and closed up 0.3% Tuesday after gyrating between gains and losses throughout the day.
"Tech is going to be swinging," Mr. Bourdon said. "Politics are getting a bit more into the game."
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