Equities: Why the Tech Sector Remains Under Pressure?
The U.S. technology sector closed the first quarter of 2026 in a condition that our indicators define as structural weakness. The KBMeter Health Score of XLK — the ETF that tracks the Technology segment of the S&P 500 — stands at 38 out of 100, a level that, in the model’s history, has occurred in less than 16% of trading sessions over the past five years and signals the absence of favorable conditions across all five key subcomponents: trend, momentum, volumes, volatility, and short-term outlook.
This configuration is the result of a combination of overlapping factors. On the geopolitical front, the conflict in Iran has generated an energy shock that is compressing margins across all computationally intensive sectors, starting with the data center infrastructure that underpins the artificial intelligence narrative. On the macroeconomic front, U.S. labor market data for February — showing 92,000 jobs lost — has reignited recession fears in a context where the Fed lacks the room to cut rates without fueling inflation already under pressure from the universal tariffs introduced in 2025. Finally, on the sector level, downward revisions to AI infrastructure spending commitments by some of the largest players have cracked the narrative that supported the sector for much of the past three years, raising the still unresolved question of when and how these extraordinary expenditures will translate into actual cash flows.
In this analysis, we attempt to line up the figures coming from our Score system, interpret their meaning, and compare them with similar episodes over the past five years.
The macro factors behind the decline Several factors continue to weigh on the technology sector — some have been in play for months, while others have emerged progressively.
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Data as of 01.04.2026. The health scores and derived indicators are the result of internal statistical models and do not correspond to standardized, commonly used indicators. This analysis is for informational and descriptive purposes only. It does not constitute financial advice, investment solicitation, or a recommendation to buy or sell financial instruments under Legislative Decree 58/1998 (TUF) and the MiFID II Directive. Past performance is not indicative of future results. The number of episodes analyzed is limited — six cases over ten years — and is not statistically sufficient to establish causal relationships or make reliable forecasts. Any investment decision must be made independently by the reader, based on their financial situation, risk tolerance, and, where appropriate, with the support of a licensed financial advisor. KBMeter and the authors of this analysis accept no responsibility for financial decisions made based on the published content.
