Tech stocks to lead earnings season again?

10/12/2009 8:30 am EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

It's early yet in earnings season, but I were a gambling man, I'd give the technology sector odds on leading the stock market again this quarter.

Wall Street is beating the bushes for earnings growth right now. If earnings don't go up in the next quarter or two, stocks won't be able to continue the rally that began in March.

Anbd where's the growth going to come from? Financials are kind of iffy. Bank accounting is going to be an unprdictable mess this quarter what with write ups for rallies in toxic assets, and write downs for the rising price of banks' own debt (yes, that counts as a loss for accounting purposes), commercial real estate loans and credit card debt.

Commodities and materials stocks will do well if the dollar keeps stumbling and if China looks like its still buying, but these cyclicals are starting to seem pricy.

Nope, for good ol' fashioned earnings power right now, it's hard to beat technology stocks.

And Wall Street analysts are determined that investors won't forget it.

On Friday, October 9, Barclays upgraded IBM (IBM) as part of an upgrade of the whole computer hardwar sector. IBM climbed almost 3% on the day and Hewlet-Packard (HPQ) moved up 2%. Inel (INTC) and fellow chip-maker Texas Instruments (TXN) rose 1.5% and 5%, respectively.

Even Qualcomm (QCOM), which has lagged the sector,climbed 0.6%.

Credit Suisse boosted its target price for Google (GOOG) and that stock inched ahead 0.4%. Maybe it's harder to move a $500 a share stock or maybe investors rightly see Google as company driven by consumer spending and advertising and they still have doubts about the consumer's willingness to spend.

(Full disclosure: I own shares of Qualcomm.

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