SPDR Technology Select Sector Fund Today
Select Technology Sector SPDR Fund
(As of 11/25/2024 ET)
- 52 week range
- $181.32
▼
$238.14
- Dividend yield
- 0.55%
- Assets under management
- $72.95 billion
With just over a month left in 2024, the technology sector stands out as one of the year’s leaders. Technology Select Sector SPDR ETF New York Stock Exchange: XLKwhich tracks the performance of leading technology stocks, has gained an impressive 21.3% year to date. Despite the strong rally, XLK is showing signs of potential for even stronger gains as it consolidates within a rising wedge, just 1.96% off its 52-week high. This proximity to a potential breakthrough raises an important question: Should investors be looking for further gains in the tech sector as the end of the year approaches?
December seasonal tailwind
December has historically been a strong month for stocks. The S&P 500 averaged a 1.3% gain in December since 1928, making it the third-best month of the year for stocks, according to Dow Jones Market Data. This seasonal strength could provide the tailwind needed to end 2024 on a high note, especially now that two key uncertainties – the US election and NVIDIA’s long-awaited earnings report – are behind us.
However, in recent months, the XLK has lagged slightly behind the broader S&P 500. If the technology sector outperforms in December, it will be the third year of outperformance in the past four years. However, whether XLK can break out and continue to rise depends on the performance of its three largest holdings: NVIDIA, Apple and Microsoft, which together account for nearly 41% of the ETF’s weight.
NVIDIA: sector torchbearer
NVIDIA today
(As of 11/25/2024 ET)
- 52 week range
- $45.01
▼
$152.89
- Dividend yield
- 0.03%
- P/E ratio
- 53.53
- Target price
- $164.15
Being the largest holding in XLK, NVIDIA NASDAQ: NVDA has a significant impact on the ETF’s performance. The company continues to dominate the artificial intelligence space, and its third-quarter earnings were stellar. NVIDIA reported a 93.6% year-over-year increase in revenue to $35.08 billion, beating analysts’ expectations, and adjusted earnings per share of $0.81 beat estimates by $0.12. Demand for Hopper and Blackwell’s AI-driven platforms remains impressive, with the company increasing gross margins and maintaining strong profitability.
From a technical perspective, NVDA is consolidating near its all-time high, trading just below the $150 resistance level. A decisive break above this zone could give both NVDA and XLK a boost, providing a strong catalyst for growth in the tech sector later in the year.
Apple and Microsoft: Decisive Parties
Apple today
(As of 11/25/2024 ET)
- 52 week range
- $164.07
▼
$237.49
- Dividend yield
- 0.43%
- P/E ratio
- 38.30
- Target price
- $235.25
While Apple NASDAQ:AAPL and Microsoft NASDAQ: MSFT NVDA and XLK have underperformed this year, and their contributions to the ETF business remain critical.
Apple has spent most of the year consolidating and is now just 3.77% off its 52-week high.
This narrow range could serve as a launching pad for a breakout if overall market sentiment remains favorable. Changing the dynamics here will significantly improve the XLK’s performance.
Microsoft today
(As of 11/25/2024 ET)
- 52 week range
- $362.90
▼
$468.35
- Dividend yield
- 0.79%
- P/E ratio
- 34.55
- Target price
- $503.03
Microsoft, on the other hand, was the weakest of the three. The stock is down 12% from its 52-week high and has struggled with relative weakness throughout the year.
However, a break above $430 could signal a trend reversal, providing much-needed support for XLK.
Given MSFT’s historical resilience and dominance in the cloud computing space, the potential for a near-term recovery cannot be discounted.
Balance between risk and reward
XLK’s lead-up to December is promising, but chasing gains without clear confirmation carries risks. NVIDIA appears well positioned to lead the charge, but weak performance from Apple and Microsoft could limit the sector’s growth potential.
Investors looking to benefit from XLK’s potential breakout may want to wait for signs of strength from its three largest holdings, particularly Apple and Microsoft. While NVIDIA’s trajectory suggests bullish momentum, the broader sector will need support from these two laggards to sustain the rally for the rest of the year.
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