US Turns Higher
Tech-fueled strength is helping the US join most of the rest of the world in an index-level uptrend
Key Takeaway: Breadth is bad, but when the largest sector goes vertical, index-level trends tend to improve. The Technology sector's large and growing influence in cap-weight US indexes is hard to overlook.
More Context: The technology sector now accounts for more than 30% of the S&P 500. While Financials and Industrials are often seen as bellwether sectors for the index but in terms of driving the direction of the index, their relative importance is waning. Over the course of 2021 and into 2022, Financials experienced their longest sustained period of strength versus Technology in nearly a decade. But that strength has faded and the ratio between Financials and Technology is at its lowest level in at least 30 years.
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