It’s become gospel that technology is the most important sector of the U.S. stock market; after all, tech stocks have the largest weighting in the S&P 500 (~26%), and the sector outperformed all others over the last year (+26%).
Asian equities kicked off the week in negative territory following the declines on Wall Street on Friday. The solid U.S. GDP data did little to support markets. The economy expanded at its quickest pace since 2014 in the second quarter, growing 4.1%, almost double the first quarter’s growth. However, investors have already priced in the positive news and so it came as no surprise. In fact, the surprise was in some of the big tech earnings results, in particular, Facebook, Twitter and Intel, which led to declines of more than 2.4% on the Nasdaq Composite Index on Thursday and Friday.
Right now, we have a divergent market where the Dow is still wrestling with the middle of the range while the small caps are leading to the upside. The wild card could now be oil stocks now that oil peaked in its 233-day window and made a hard-right turn through near-term resistance. As you can see from the chart below, there were two main support zones based on the recent action going back to the low in February.
The United States led a coordinated effort, along with Britain and France, to strike specific targets in Syria on Friday night. This was the culmination of what began as a horrific chemical attack carried out by forces aligned with the Syrian government on a town held by Syrian rebels last weekend.