Tech Rally Is a Mega-Cap Story
Since late March, the U.S. technology sector has been the dominant story in the markets. The Nasdaq 100 has rebounded by more than 16% in fewer than 30 trading sessions, pulling the S&P 500 higher and fueling a powerful narrative: artificial intelligence, massive investments in digital infrastructure, and semiconductors. Everything seems to be pointing in the same direction. By the end of May, KBMeter assigned technology the highest score among all macro categories, with a directional signal at its strongest level in the past 12 months. It is difficult not to describe it as a rally.
The question worth asking, however, is: whose rally is it?
To answer that, we need to take a step back and look not only at the Nasdaq index, but also at how the instruments that truly measure “growth” as an investment style have behaved. In the U.S. market, there are two ETFs that track growth stocks and value stocks, respectively, within the 1,000 largest companies by market capitalization: the Russell 1000 Growth and the Russell 1000 Value. If the technology rally were truly a broad-based market rally, these two instruments should reflect it. But they do not.
During the same month in which the Nasdaq gained more than 3%, the Russell 1000 Growth ended slightly in negative territory.
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Photo by manseok Kim
