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“There is short-term optimism, almost as a last cry … before the rate hikes and any of the concerns surrounding Big Tech with a Democratic government slowing it down.”
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This is Gene Goldman, chief investment officer at Cetera Financial Group, talking to Bloomberg News about an increase in technology purchases by hedge funds before high-profile profits from companies like Apple AAPL
and Amazon AMZN,
in the next days.
According to Goldman Sachs Group’s principal brokerage, hedge funds have increased their net exposure to megacaps in the technology sector in one of the fastest steps in recent years. This came out of a stretch where “smart money” was unloading some of the most prominent names.
After standing firm in the face of the pandemic, Facebook FB,
Apple, Amazon, Microsoft MSFT,
and Alphabet GOOG,
everyone is expected to experience faster profit growth than the rest of the market for a 12th consecutive quarter, Bloomberg estimates show.
If Netflix’s NFLX,
showing last week’s results is an indication that this “last breath” can be profitable for those who are filling up with technology stocks. Netflix rose 17% in strong numbers.
Read: The ‘biggest red flag’ in this bull market has simply disappeared, said the trader
Megacap technology aside, it’s a huge week for overall earnings, with almost a quarter of the S&P 500 set to report results. Together, the reporting companies represent 39% of the index by market value. Given that the S&P 500 is weighted by market capitalization, this list of companies will have a disproportionate impact on the index’s profit trajectory.
It’s also a busy stretch for the DJIA Dow Jones Industrial Average,
with 13 members of the blue-chip index preparing to report its quarterly results, including 3M MMM,
, Johnson & Johnson JNJ,
and American Express AXP,