Tech stocks are lagging the broader market this month, signaling potential strength for value stocks.
September to date, the technology sector is lagging the S&P 500 by the most for a month since November 2018, the Wall Street Journal reported. The benchmark is down 1.4% as of September 15, while the technology sector has slipped 4.5% during that period.
Tech stocks are positioned to be among the most affected by higher for longer interest rates. The Federal Reserve’s Federal Open Market Committee (FOMC) will meet this week to discuss interest rates, with the market expecting officials will hold rates steady. There is still a decent possibility of another hike before the end of the year, according to analysts.
Expectations for when the Fed will begin to cut rates continue to be pushed off further. The Journal reported traders assigned a 57% probability to a lower Fed target rate by June 2024 last Friday, down from the 81% probability they assigned a month earlier, according to CME Group’s FedWatch tool.
Disappointing performance from tech stocks coupled with higher volatility could support value stocks in the current environment.
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