The U.S. stock market’s longtime leader has regained its crown.
The information technology sector has been rallying thus far in May, a steep upward move that has returned it to near-record territory and helped it erase some of the pronounced weakness it saw earlier this year.
The sector XLK, +1.30% has gained 7.5% thus far this month, nearly twice as much as any of the other 11 primary S&P 500 sectors. (In second place is materials, up 3.9% over the same period.) The S&P 500 SPX, +0.94% itself is up 2.9% thus far in May, while the Dow Jones Industrial Average DJIA, +0.80% is up 2.5%. The Nasdaq Composite Index COMP, +0.89% which maintains a heavier weighting toward large-capitalization technology and internet names, is up 4.8% over the same period.
The gains in the sector have been broad based, but two stocks in particular have stood out as lifting the overall industry.
Apple Inc. AAPL, +1.43% the largest stock in the market, has risen for nine straight sessions, its longest streak since July 2017. It is also poised for its fifth straight record close, the longest streak of that ilk since February 2015. The iPhone maker is up 14.8% thus far in May, if that level holds, this will represent its biggest monthly advance since February 2012.
The gain—which has put Apple just 7.3% below an unprecedented market capitalization of $1 trillion—had two primary catalysts. At the start of the month, Apple reported strong quarterly results, which included steep growth in China. Subsequently, billionaire investor Warren Buffett disclosed that he had bought 75 million Apple shares in the first quarter of the year, in what was seen as a massive bode of confidence in the stock.
“While his investment announcement may not have marked the bottom in the sector (with the most recent bottom reached on April 25) or for Apple’s stock, it perhaps woke investors up to the idea that some value opportunities emerged within tech during the recent pullback,” wrote Lindsey Bell, an investment strategist at CFRA.
The sector has come under pressure of late, with many investors worried that tech’s big rally in 2017 had gotten overextended, with limited additional upside potential from levels that were seen as elevated.
Further weakness came with a scandal at Facebook Inc. FB, +1.57% over how the social-media giant had handled its user data. The controversy, and concerns that new regulations might be instituted against data-using tech companies, spilled into the stock, with shares falling into bear market territory—or a drop of 20% from a peak.
Since then, however, helped by a blowout earnings report, Facebook has almost entirely recovered those losses. It is up nearly 13% over the past month, and it sits less than 5% below record levels.
Read: Facebook appears to be bulletproof after stellar earnings report
Among other recent tech outperformers, Microsoft Corp. MSFT, +1.00% is up 4.5% thus far this month, while Google-parent Alphabet Inc. GOOGL, +1.52% GOOG, +1.37% is up 8.6%— both have significantly outperformed the broader market in May. Semiconductor stocks SOX, +1.80% have also done well, with the sector up 9% in May. Nvidia Corp. NVDA, +1.70% is up 15% thus far this month, while Advanced Micro Devices AMD, +1.51% is up 11.6%.
Overall, the tech sector has posted revenue growth of 13.58% over the past year, according to FactSet data, well above the 9.69% growth of the S&P 500.
