Tech stocks sag as shift takes hold

There’s a potential changing of the guard underway on Wall Street.

In the past five trading days, technology stocks — which have been leading the market the entire year — have turned lower. Taking tech’s leading role on Wall Street are bank shares, oil-related stocks and companies that transport goods via trains, trucks and airplanes.

Consider the tech-stock-dominated Nasdaq. It has been the biggest gainer of all the major U.S. stock indexes this year but has tumbled 1.5% the past five sessions, and its 100 biggest companies have dipped more than 2%.

In contrast, the Dow Jones transportation average, which includes companies such as package delivery names FedEx and UPS, railroads such as Kansas City Southern and airlines such as JetBlue, have shot up more than 8%. Similarly, the KBW Bank index, which includes banks such as J.P. Morgan and Bank of America, is up more than 8%. An index of oil-related stocks is up more than 6%.

“Our theme of ‘changing of the guard’ continues to play out,” says Gary Kaltbaum, president of Kaltbaum Capital Management. In Wall Street-speak, a “rotation” is underway from winners such as tech to other parts of the market. The good news? Investors aren’t fleeing the stock market altogether. They’re moving some cash out of tech into stocks that offer more value.

“Stock market leadership is experiencing an aggressive rotation, from momentum (stocks) to low volatility (ones) and from tech to banks,” noted Richard Turnill, global chief investment strategist at BlackRock.