Technology is the best performing sector this year.The sector emerged a coronavirus winner thanks to a shift in consumer habits to a purely digital world with work, learn and shop from home. Big tech stocks propelled the broader stock market higher, especially the tech-heavy Nasdaq Composite Index, which crossed the 10,000-milestone for the first time this week.
However, Jun 11 was the worst day for U.S. stocks since March. The market crash has opened up an opportunity for investors who had missed their previous chance of parking their money in these tech jewels. Big five tech stocks including
Apple ( AAPL Quick Quote AAPL - Free Report) , Facebook ( FB Quick Quote FB - Free Report) , Microsoft ( MSFT Quick Quote MSFT - Free Report) , Amazon ( AMZN Quick Quote AMZN - Free Report) and Alphabet ( GOOGL Quick Quote GOOGL - Free Report) lost more than $269 billion in value on Jun 11.
Shares of Apple dropped 4.8%, while Alphabet declined 4.29%. Facebook and Microsoft both lost more than 5% and Amazon retreated 3.38%. Cisco (CSCO) and IBM (IBM) witnessed a sharp drop of about 7.91% and 9.1%, respectively, on Jun 11.
Concerns of a second wave of coronavirus have taken an upper hand lately as COVID-19 cases started to rise in some states with easing lockdowns. Texas
alone reported 2,504 new infections on Jun 10, marking the highest one-day total since the pandemic started. Tech to Surely Make a Comeback
Tech will rule in the second half of 2020, with or without coronavirus. Growing demand, the trend for “new normal,” emerging technologies, andgovernment and central bank aids leave plenty of upside for players in this space. Work from home, e-learning, telehealth and online shopping will keep this space in a sweet spot ahead (read:
Best ETF Ideas for the Second Half of 2020).
Further, technology has a solid
Zacks Sector Rank #5, out of the 16 sectors Zacks sectors. Tech companies are cash-rich. As of fourth-quarter 2019, cash, cash equivalents and marketable securities were at around $452.5 billion. In the tech space, cloud looks to be the most promising. DocuSign DOCU and Zoom Video ZM are two COVID-19 winners that appear to have further room to run.
Among the big five tech stocks, Alphabet, Amazon and Microsoft will capitalize on cloud technology. Amazon will also benefit from the online shopping trend and its presence in the streaming segment. Apple should win from the Services business and strong adoption of Apple Pay. Facebook is cashing in on user growth.
How to Play With ETFs
Investors who could not join the star tech stocks before, now get a buy-the-dip opportunity. Below we highlight a few tech ETFs that have good exposure to the above-mentioned tech behemoths.
Apple – Technology Select Sector SPDR Fund (
XLK Quick Quote XLK - Free Report) , Vanguard Information Technology ETF ( VGT Quick Quote VGT - Free Report) , iShares U.S. Technology ETF ( IYW Quick Quote IYW - Free Report) Microsoft – XLK, IYW, VGT
Alphabet – Communication Services Select Sector SPDR Fund
XLC, Vanguard Communication Services ETF ( VOX Quick Quote VOX - Free Report) , Fidelity MSCI Communication Services Index ETF ( FCOM Quick Quote FCOM - Free Report)
Facebook – XLC, VOX, FCOM
Amazon – Fidelity MSCI Consumer Discretionary Index ETF (
FDIS Quick Quote FDIS - Free Report) , VanEck Vectors Retail ETF ( RTH Quick Quote RTH - Free Report) Want key ETF info delivered straight to your inbox?
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