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'Old school' tech stocks rally: What's up?

The company's HP Enterprise Services unit in Plano, Texas
Mike Fuentes | Bloomberg | Getty Images
The company's HP Enterprise Services unit in Plano, Texas

We are seeing a continuation of a two-day rally in financials today, and it is fairly broad, including most of the regional banks.

Banks this week:


That's not what is interesting me, though. we are getting a vicious rotation into "old school" tech names this week.

Techs this week:


And there are many others. Banks rising make some sense on higher interest rates, though a flattening of the yield curve (which is what we have seen in the last two days) is not usually a positive for banks.

But why a tech rally? There are several likely explanations:

First: Techs are not as levered and more "growthy," so they get a higher multiple in a rising-rate environment, which is usually equated with growth.

Second: Many of the super-growth tech names may have maxed out for the moment (Workday, Fireye, Tableau Software, etc.), so it's time to rotate into "old school" names; this may also be true of other "super-growth" sectors, like biotech and defensive groups like healthcare. The biotech ETF (XBI) is down again today.

Third: It may not be an accident that the two groups moving the most are the two groups with the heaviest ranking in the S&P 500. Much trading is now driven by indexes and index futures, and specifically by ETFs like the SPDR S&P 500 (SPY), which routinely trades north of 125 million shares a day.

Finally, we are seeing the usual, knee-jerk reaction in interest-rate sensitive stocks like REITs, which have had a decent run this year...until yesterday.

REITs this week:


—By CNBC's Bob Pisani

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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