Tech Stocks led the market rally. Now they are falling behind.

A year ago, the US stock market bottomed out, with the S&P 500 hitting its lowest point after falling 34% in just 23 business days.

At the time, few could have imagined the recovery the market has experienced, including 34 all-time highs for the index from last year’s low. Despite a global pandemic that has killed nearly 550,000 people in the US, eliminated millions of jobs and restricted economic activity, stock indexes have risen to new highs.

Behind the surprising rebound are a number of factors, including, initially, swift emergency measures by the Federal Reserve to support financial markets and the economy. Those helped push US stocks out of their 2020 low and initiated a stretch of sustained leadership from growth and technology stocks. As investors reentered the stock market last year, they grabbed stocks in companies that would benefit from the pandemic. Unlike sectors like energy and retail, which were suddenly faced with uncertainty, some analysts praised tech stocks as having great growth potential.

Recently, however, that rally has stalled, briefly sending the high-tech Nasdaq Composite into a correction – a 10% decline from a recent high. Since the index’s recent record high on February 12, growth and tech stocks have struggled. On the contrary, other sectors have exploded, including energy and finance.

The following charts show how the market has changed since February 12.


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