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“There is short-term optimism, almost like a last hurray … before soaring rates and all the concerns surrounding Big Tech with a Democratic government slow it down.”
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That’s Gene Goldman, chief investment officer at Cetera Financial Group, talking to Bloomberg News about an increase in technology buying by hedge funds, ahead of high-profile revenues from Apple AAPL, among others,
and Amazon AMZN,
the next few days.
According to Goldman Sachs Group’s prime brokerage, hedge funds increased their net exposure to technology mega caps at one of the fastest speeds in recent years. This came from a stretch where the “smart money” was unloading some of the most prominent names.
After holding out strong in the face of the pandemic, Facebook FB,
Apple, Amazon, Microsoft MSFT,
and Alphabet GOOG,
All are expected to deliver faster earnings growth than the rest of the market for a 12th straight quarter, Bloomberg estimates.
Like Netflix’s NFLX,
showing after last week’s results is an indication, such a “last hurray” could be profitable for those loading on technology stocks. Netflix was up 17% on strong numbers.
Read: The ‘biggest red flag’ in this bull market has just disappeared, trader says
Mega-cap tech aside, it’s been a huge week for total revenues, with nearly a quarter of the S&P 500 reporting results. Combined, 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 an extraordinarily large impact on the index’s earnings trajectory.
It’s also a busy trajectory for the Dow Jones Industrial Average DJIA,
with 13 members of the blue chip index preparing to report their quarterly results, including 3M MMM,
, Johnson & Johnson JNJ,
and American Express AXP,