'Old school' tech stocks rally: What's up?
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:
- JPMorgan: 5%
- Morgan Stanley: 5%
- Zions: 4%
- Wells Fargo: 3%
That's not what is interesting me, though. we are getting a vicious rotation into "old school" tech names this week.
Techs this week:
- Hewlett-Packard: 11%
- Sandisk: 10%
- Microsoft: 6%
- Seagate Technology: 6%
- Applied Materials: 6%
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 . 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