Toronto, Canada – The tech sector has shown a resurgence after a brief pause earlier this year. MoneyTalk’s Greg Bonnell delves into the sector’s prospects and the overall market outlook with Benjamin Gossack, Managing Director & Portfolio Manager at TD Asset Management.
Gossack points out that although big technology stocks were lagging for a while, they are now back on track. He emphasizes the importance of analyzing trends and patterns in the market, highlighting the recent underperformance of the technology sector. Despite this, the S&P 500 managed to reach new highs, showcasing the resilience of the broader market beyond tech.
Discussing the performance of the tech sector, Gossack presents charts illustrating relative strength through a fraction comparison method. By examining market cap leaders and equal weight stocks, he emphasizes the importance of both breadth and leadership in evaluating sector performance. The analysis reveals a trend of tech stocks underperforming before eventually resuming an upward trajectory, signaling a potential shift in market dynamics.
Shifting the focus to discretionary stocks, Gossack highlights their recent performance and the implications of higher borrowing costs and inflation. He notes the disparity between market cap-weighted and equal-weighted discretionary sectors, pointing out the impact of key players like Amazon and Tesla on market dynamics. The discussion delves into the consequences of price competition within the sector and underscores the significance of trends in discretionary versus staples stocks.
Moving on to utilities, Gossack sheds light on the sector’s recent performance, characterized by a period of catch-up after a period of underperformance. He explains how the market is signaling the need for increased power generation, with certain utility stocks positioned as winners in anticipation of rising energy demands. The analysis underscores the importance of monitoring trends and market signals to make informed investment decisions in a dynamic market environment.
