The Nasdaq Composite climbed 10 per cent in the first three months of this year, powered by a rally in technology stocks that leaves the index poised for its best quarter since the end of 2013.
Many of the biggest names in Silicon Valley notched a sterling performance in the January – March period. In a sign of tech’s powerful run, groups in the industry that are listed on the closely watched Nasdaq 100 index added some $400bn in market value in the first quarter, FactSet data show.
Apple, the world’s biggest tech group, soared 24.4 per cent to $144. Meanwhile, social network Facebook charged higher by 23.7 per cent to $142.35. Combined, the two groups contributed some $227bn in market value over the period.
The performance of tech came as investors poured $5.95bn into US technology funds, the biggest inflow on record in dollar terms, and the largest since the end of 2015 as a proportion of assets under management, according to data from EPFR.
Analysts are expecting that a solid earnings growth pace will be maintained for the first quarter of 2017 when results arrive next month. Earnings per share among companies listed in the S&P 500 technology sector climbed by 11.2 per cent year-on-year during the fourth quarter of 2016, a significantly better pace than the 6.9 per cent rate that Wall Street had forecast at the end of December.
Lindsey Bell, an investment strategist with CFRA Research, notes that she has “identified a cautionary sign for technology”: Expectations for tech-sector profits for the first quarter have remained essentially steady since the end of last year, bucking a typical pattern in which forecasts are reduced.
“This sets a high bar for some companies,” Ms Bell said.