BTIG reports that the S&P 500 Technology sector is set to finish April up 17%, representing its most powerful monthly gain since November 2002. The move underscores a concentrated rebound in technology-related stocks during the month.
The brokerage noted that the nine biggest monthly gains for the technology sector all occurred between 1997 and 2002. Of those nine months, seven were followed by declines in the next month, with an average subsequent return of -10.37%. Only two of those large advance months produced gains in the following month - November and December 2002 - episodes that coincided with the low point of the dot-com bear market after an 83% decline.
Semiconductor stocks led the advance within the sector. The SOX semiconductor index climbed 37% in April, a move that would rank as the second-largest monthly gain on record, behind only February 2000. BTIG also highlighted that the SOX currently trades farther above its 200-day moving average than at any time over the past 26 years.
Looking at the sector's history, three of its largest monthly gains occurred when the market was trading at all-time highs - July 1997, January 1999, and December 1999. Those months were followed by returns of -3.18%, -12.3%, and -7.7%, respectively.
Chinese equities also showed notable strength during April. The KraneShares STAR 50 Market ETF (KSTR) rose 26% for the month, reaching its highest level since 2022. The xTrackers CSI 300 ETF (ASHR) hit a 52-week high on Friday and is described as approaching a multi-year breakout. Separately, the China Internet Fund (KWEB) is attempting to form a double bottom against its March lows.
Context and market notes
- The S&P 500 Technology sector's 17% gain in April is characterized by heavy strength in semiconductor names, as reflected in the SOX index.
- Historical patterns from 1997-2002 show that outsized monthly gains for the sector have frequently been followed by declines in the subsequent month.
- Several China-focused ETFs recorded meaningful rallies in April, with KSTR reaching a high not seen since 2022 and ASHR attaining a 52-week peak.