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- Fundamental and cyclical underpinnings of Technology sector to prevail over the medium-term – Charles Schwab
Fundamental and cyclical underpinnings of Technology sector to prevail over the medium-term – Charles Schwab
Rarely is there any sector that has everything going for or against it – and that is true today of the Information Technology sector. Strategists at Charles Schwab are neutral on the sector now.
Continued relative strength and seasonal tailwinds to tip the scales in favor of the sector
“We think that the fundamental and cyclical underpinnings of the Technology sector will prevail over the intermediate-term.”
“The strong trend in capital expenditures on productivity-enhancing technologies will continue to support robust profitability, and the maturing phase of the business cyclical is favorable to the growth-oriented sector.”
“Expectations for a rise in interest rates could be a short-term headwind for richly valued technology stocks. However, if economic growth continues and inflation pressures eventually ease – as we think they will – a further rise in interest rates could reflect investor optimism in the economy, which is typically good for the Technology sector.”
“We are currently neutral on the sector as we assess the reaction to higher interest rates, but continued relative strength and seasonal tailwinds at the start of the year could tip the scales in favor of the sector.”
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