The major stock indexes have had an explosive start this year, with the Dow Jones Industrial Average and the broader S&P 500 up 14% and 16%, respectively, as of April 19.
Yet the tech-laden NASDAQ Composite has advanced a sizzling 20%, thanks to an especially strong performance among tech stocks.
Take a look at the stellar performance so far this year of the so-called FAANG stocks — Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX) and Google (GOOGL).
Tech Rules
True, the mixed performance of ride-sharing company Lyft (LYFT) since its late-March initial public offering has raised some concerns. Uber Technologies has also cut its expected IPO valuation.
That said, business-software tech companies are performing well.
As the Wall Street Journal points out in a recent post:
“Nearly 50 U.S. business-software companies have gone public since 2016, including Twilio Inc., MongoDB Inc. and Zscaler Inc. That compares with 13 consumer-technology companies, such as Dropbox Inc. and Snap Inc.
The business-software companies have performed much better, their shares rising a median 126% from their debuts through Tuesday’s market close, according to a Wall Street Journal analysis of Dealogic data. That compares with a median 15% increase for the consumer-tech companies.”
Takeaway
Tech stocks pulled back sharply during the second half of 2018.
Yet the sector is firmly back in market leadership this year.
In my opinion, it’s a big reason why the stock market is performing so well.
As tech goes, so goes the entire market.
Photo Credit: Chris Urbanowicz via Flickr Creative Commons
