The recent rally in technology stocks has lost momentum, despite a solid quarterly earnings reporting season. According to Bloomberg data, about 89% of the technology companies in the S&P 500 ($SPX) (SPY) that have reported earnings this reporting season have beaten estimates. However, those stocks fell an average of -0.8% the day after reporting earnings.
The faltering rally suggests that the good earnings news is already priced into the market. Carnegie Investment Counsel said, “You need to have results that are just incredible for that to be sustained.” This year’s stock gains have lifted valuations toward levels last seen when interest rates were near zero, and “it makes sense that we are seeing a pause and a pullback this season.”
