Tech makes a comeback as Wall Street’s trendy trade

SAN FRANCISCO — Wall Street’s beloved tech trade is back on.

US technology stocks last week took back their title as the stock market’s most profitable bet of the year, and the so-called FANG stocks have regained their shine after investors dumped the high-flying group in December over fears that the decadeold bull market was dying.

San Francisco’s unicorn startups are pouncing on tech’s newfound momentum. Ride-hailing company Uber Technologies, Inc. is planning to kick off a long-awaited initial public offering in April, Reuters reported on Thursday.

That puts Uber close on the heels of smaller rival Lyft, Inc., which released its filing for an initial public offering at the start of March following two solid months for technology stocks. The Nasdaq index is now on track for its strongest quarter since 2012, rebounding from its worst quarter since 2008.

“There was a lot of forced derisking by hedge funds in December,” said Joel Kulina, a trader at Wedbush Securities who specializes in tech stocks. “Now there’s a lot of FOMO,” or “fear of missing out,” he said, a familiar motivation among US investors in recent years.

The S&P 500 information technology index has surged 3.6% so far this week and is up 16.4% year to date, edging out a 15.4% gain in the industrial index, which led since February but was held back this week by a slump in Boeing.

In another sign of turning sentiment, the FANG stocks — Facebook, Amazon.com, Netflix and Google parent Alphabet — each logged year-todate gains on Monday that were better than the S&P 500, a first in 2019.

Investors dumped technology and FANG stocks late last year due to deepening fears that the Federal Reserve would further raise interest rates and concerns that the China-US trade conflict would escalate further and hurt corporate profits.

But the Federal Reserve in January signaled that rate hikes were essentially off the table for the time being, removing Wall Street’s largest source of anxiety.

Facebook remains 22% below its July 2018 record high as it faces ongoing scrutiny of its handling of users’ personal data, but the social network’s shares have risen 30% since December, reflecting a rebuilding of investor confidence.

Netflix has gained 34%in 2019, even after its December-quarter revenue disappointed investors, and as it faces increasing competition from rivals including Walt Disney Co. and potentially Apple.

Many investors are also becoming more confident that Washington and Beijing will resolve their trade dispute, opening the way for technology companies’ earnings to grow this year, instead of declining, as currently projected by sell-side analysts. —