Tech stocks get all the glory. AI names get all the attention. But in the last several days, we’ve seen a BIG “Revenge of the Non-Tech Nerds” move in the stock market!
Check out the MoneyShow Chart of the Day, which shows the percentage change over the last five trading days in several ETFs. They include the State Street SPDR Dow Jones Industrial Average ETF (DIA) in green, the Invesco QQQ Trust (QQQ) in red, the State Street Financial Select Sector SPDR Fund (XLF) in blue, and the State Street Technology Sector SPDR Fund (XLK) in black.
DIA (Green), QQQ (Red), XLF (Blue), XLK (Black) – 5-Day % Change
Source: TradingView
You can see that tech stocks have been lagging in a BIG way, while stodgy, non-tech names are picking up the baton and running with it. The XLF GAINED 1.6% in the recent five-day stretch, for instance, while the XLK LOST 4.3%. The Dow ETF rose 1.7%, while the QQQ fell 2.8%.
What’s behind the rotational action? A flurry of new questions about the durability of the AI boom and the big surge in chip stocks. One of the AI boom’s standard bearers, neocloud company CoreWeave Inc. (CRWV), has been hit particularly hard amid worries about its big debt load. Its shares and bonds both tanked this week.
Throw in crowded positioning – with big money loaded up on tech stocks relative to other sectors – and it doesn’t take much to spur a rebalancing. One that’s accompanied by a scurry for the exits in tech.
I don’t think you need to abandon tech entirely here. But like I told the audiences at our recent Orlando and Toronto conferences, I do think it makes sense to diversify. That includes putting more money into out-of-favor, undervalued, and underowned things like smaller-cap stocks, foreign stocks, and non-tech names.
After all, more weeks like this one could be coming down the pike.