A miserable week for US banks has been a boon for the shares of the nation’s biggest technology companies as traders flock toward their cash-rich balance sheets amid concerns about contagion in the financial sector.
More than $560 billion in market value has been added to the four biggest US technology and internet companies this week. Microsoft Corp. advanced more than 12%, its biggest weekly jump since April 2015, and it closed at its highest since August. The week’s advance also brought the stock’s market capitalization back above $2 trillion.
Alphabet Inc. also surged 12%, its strongest weekly gain since 2021. Amazon.com Inc., meanwhile, jumped 9.1% and Apple Inc. rose 4.4%. The tech-heavy Nasdaq 100 gained 5.8% on the week, its best week since November, and far stronger than the S&P 500 Index’s 1.4% advance. That divergence represents the biggest one-week outperformance by the Nasdaq 100 since the financial crisis in October 2008.
“Tech is more of a safe haven than your traditional cyclical sectors, and it has already gone through a re-pricing, which means it looks attractive relative to the rest of the market,” said Sam Stovall, chief investment strategist at CFRA.
The idea that big tech is safer has fueled the investor rotation, especially as turmoil in the financial sector sparked by the collapse of Silicon Valley Bank and Signature Bank underlines the perception of risk elsewhere in the economy. The KBW Bank Index, which tracks 22 of the largest US lenders, sank almost 15% this week, adding to last week’s 16% plunge, which was its worst since March 2020.
