Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
Blog Home
Bob Carey
Chief Market Strategist
X •  LinkedIn

  Q4 Has Been The Best Performing Quarter For Technology Stocks Since 1994
Posted Under: Sectors
Supporting Image for Blog Post


View from the Observation Deck 

  1. Today's blog post is a reminder of the potential for a seasonality trade in tech-oriented stocks heading into Q4. We chose 1994 as our starting point because it coincided with the start of the Internet Revolution. 
  2. One of the potential boosts for tech-oriented companies in Q4 comes from IT spending. Managers have just three months left to spend their budgets. It is often a use it or lose it proposition.
  3. A second potential driver for business is the launch of new consumer electronics products to coincide with the holiday shopping season. We have already witnessed a couple of major smartphone launches in the past few weeks. 
  4. Semiconductor sales, which are a good barometer for the technology sector, in our opinion, have been strong in 2014.
  5. Worldwide sales of semiconductors rose 9.9% (y-o-y) to $28.10 billion in July, the industry's highest-ever monthly sales total, according to the Semiconductor Industry Association.
  6. From 1994-2013, the S&P 500 Information Technology Index posted an average total return of 7.27% in Q4, nearly double the second-highest quarterly average (3.79% in Q2).
  7. Since 1994, the S&P 500 Information Technology Index posted a positive total return 75% of the time in Q4. The best showing was in Q4'98 (+36.46%), while the worst was in Q4'08 (-25.73%) – the year of the financial crisis.
  8. On a price-to-earnings (P/E) basis, technology stocks are a value at current levels, in our opinion. As of 9/23, the estimated 2014 and 2015 P/Es for the S&P 500 Information Technology Index were 16.77 and 14.89, respectively, well below the 10-year average of 18.98, according to Bloomberg.   

This chart is for illustrative purposes only and not indicative of any actual investment. There can be no assurance that any of the projections cited will occur. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Information Technology Index is capitalization-weighted and comprised of S&P 500 constituents representing the technology sector.

To Download a PDF of this post, please click here.

Posted on Tuesday, September 23, 2014 @ 3:38 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
Market Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email

Looking Forward to the 4th Quarter
S&P 500 Top-Line Growth Estimates (Updated)
A Lot Of Capital Is Still Sitting In Money Market Funds Earning Next To Nothing
Growth-Oriented Stocks in the S&P 500 Outperforming Dividend-Payers (2012-Present)
U.S. Natural Gas Rig Count No Longer A Barometer Of Production Capabilities
Stay Plugged In
Recent Trend For Treasury Returns Not Very Appealing
Japanese Equities Still Worth A Look
The Math Matters When it Comes to Valuations
It’s Time For Another Look At The Bond Market
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.