This is usually the week tech companies crow about themselves at the CES show. But this time around, it's tech companies' time to eat crow.
The value of technology companies in the S&P 500 has dropped $3.8 trillion in just 12 months. That's miles more than any other sector's value has fallen in that time, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. Even Apple, the industry's favorite, fell below the $2 trillion market value level on Tuesday when its stock dropped nearly 4% to 125.07.
And get this: Seven of the top 10 biggest drops in market value in the S&P 500 this year so far are companies in the information technology or related communications services sector.
The timing is uncanny. CES, the industry's annual bragfest in Las Vegas, kicks off this week. And S&P 500 tech investors aren't just hoping for a lift — they actually need one.
"Stocks in the technology sector have historically tended to do pretty well during the four-day CES conference," according to a report from Bespoke Investment Group.
Will CES Help Sagging S&P 500 Tech Stocks?
Generally speaking, CES is bullish for the technology sector, Bespoke says. The tech sector, on average, rose 70% of the time during the four-day show going back 30 years.
Additionally, it's a healthy move higher most of the time. Technology stocks rose 0.63%, on average, during CES, edging out the 0.39% average gain of the S&P 500 during those same periods. Additionally, tech stocks rose during CES 67% of the time, versus just 57% during other four-day periods. And tech stocks' 0.63% gain during CES is roughly double their typical 0.38% gain during other four-day periods.
Slicing Down Tech Stocks In CES Further
CES is mostly a time for tech companies to hawk new hardware. And that's definitely how investors see it, too. The top-performing subset of tech stocks during CES is semiconductors.
The semiconductor index that Bespoke tracks, a subset of tech stocks, jumped 0.9% during CES in the past 30 years. That's more than double the semi industry's typical 0.35% four-day gain. And it's higher than the move of software & services stocks, another subgroup of technology. Software and services stocks only rose 0.03% on average during CES. The tech hardware industry, also a subset of the technology industry, also gained a strong 0.76% on average during CES.
And the tech sector could use a lift now more than it has in a long time. The whole S&P 500, a driving force of the market for years, has fallen off its pedestal. The Technology Select Sector SPDR Fund is down 29.8% in the past 12 months. That makes it the third worst sector ETF in that time after just Consumer Discretionary Select Sector SPDR, off 37.2%, and Communications Services Select Sector SPDR, down 37.9%.
"It's only four days, and the margin of outperformance hasn't been exceptionally large, but historically CES has been a good time for tech-related stocks," Bespoke said. "Tech bulls could sure use it given the sector's recent weakness."
S&P 500 Tech Stocks Shred Insane Wealth
The value of the information technology sector is down $3.8 trillion in a year's time
| S&P 500 sector | Market value ch. one-year ($ trillions) |
|---|---|
| Information technology | -$3.8 |
| Consumer discretionary | -2.4 |
| Communication services | -1.9 |
| Financials | -0.6 |
| Real Estate | -0.3 |
| Industrials | -0.2 |
| Health care | -0.2 |
| Materials | -0.2 |
| Consumer staples | -0.2 |
| Utilities | 0.0 |
| Energy | 0.5 |
| Total | -9.2 |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
