“
“There’s short-term optimism, almost like a last hurray … before the rates go up and any of the concerns around Big Tech with a Democratic government slow it down.”
”
This is Gene Goldman, investment director at Cetera Financial Group, who talks to Bloomberg News about an increase in technology purchases by hedge funds ahead of Apple’s high-profile earnings ,
and Amazon AMZN,
in the coming days.
According to the main broker of the Goldman Sachs group, hedge funds increased their net exposure to megacaps in the technology sector at one of the fastest rates in recent years. This came out of a stretch where “smart money” unloaded some of the most prominent names.
After staying strong in the face of the pandemic, Facebook FB,
Apple, Amazon, Microsoft MSFT,
and Alphabet GOOG,
they are all expected to record faster profit growth than the rest of the market for the 12th consecutive quarter, according to Bloomberg estimates.
If it’s Netflix NFLX,
show after last week’s results is an indication, a “last hurray” could be profitable for those carrying tech stocks. Netflix rose 17% in strong numbers.
Read: The “biggest red flag” of this bullish market has just disappeared, the trader says
Aside from Megacap technology, it’s a big week for overall profits, with nearly a quarter of the S&P 500 planned to report results. Overall, reporting companies account for 39% of the market value index. Since the S&P 500 is weighted by market capitalization, this list of companies will have an excessive impact on the earnings trajectory of the index.
It is also a busy stretch for the Dow Jones Industrial Average DJIA,
with 13 members of the blue chip index preparing to report on their quarterly results, including 3M MMM,
, Johnson & Johnson JNJ,
and American Express AXP,