Tim Cook

  • The GOP tax bill has injected volatility into a stock market that had been seeing some of its most muted price swings on record.
  • Tech stocks have been on the wrong side of these price swings as investors have rotated out of them and into industries that have lagged in 2017.
  • Despite the rotation, the increase in volatility should be a boon for investors seeking opportunities in the market.

For months, equity investors have been anxiously awaiting the return of volatility to the market. It now appears as if that time has come.

In the end, it was the Senate’s successful passage of the massive GOP tax bill that whipped up price swings, throwing the US stock market for a complete loop for several days running as investors position around the areas expected to benefit most. And no sector has felt the brunt of this newly hectic trading to the extent that tech has.

The renewed price movements haven’t been pretty for the group. Viewed as the stock market’s foremost beacon of strength for much of 2017, tech companies have felt pressure as traders have sold out of expensive positions in order to finance purchases of lagging sectors, like financials and telecom. This so-called rotation has largely played out under the surface of major stock indexes like the S&P 500, leaving the benchmark at the whim of intra-industry cross currents.

This dynamic was at play on Monday, with the more tech-heavy Nasdaq 100 index declining 0.4%, while the S&P 500 climbed 0.5% and the Dow Jones Industrial Average surged 1%. It mirrored price action on Friday, when the Nasdaq dropped twice as much as the S&P 500, even after the latter dropped as much as 1.5% on an Read More Here