u.s. stocks rose again tuesday, this time getting some help from a sector that has lagged behind in the postelection rally: technology. the dow jones industrial average hit yet another record, rising 54.37 points, or 0.3%, to 18923.06. tech stocks rose 1.3% in the s&p 500, paring their losses since election day to 1.8%. tech companies in the s&p 500 were up 11% this year ahead of the election of donald trump as president on nov. 8, as investors viewed them as winners in the slow-growing global economy. tech stocks already were trading at relatively high valuations, lessening their appeal at a time when stocks are gaining broadly. as of nov. 8, the 12-month trailing price/earnings ratio for the s&p 500 tech sector was 20, compared with 18 for the s&p 500. amazon.com inc. and facebook inc. have both dropped 5.7% since nov. 8, and google parent alphabet inc. has lost 4.5%. the declines also have widened the performance gap between the nasdaq composite and the dow industrials, whose banks and manufacturers have helped the blue-chip index reach four records in the past four sessions. the nasdaq composite rebounded tuesday, adding 57.23 points, or 1.1%, to 5275.62. <u+201c>the markets are still trying to make assumptions about what trump may be putting in place once he becomes president,<u+201d> said thomas wilson, senior investment manager at brinker capital. traders and analysts have several theories about tech<u+2019>s troubles. some say investors are selling prior winners to buy the new ones, such as financials, which have gained 11% in the s&p 500 since the election. the potential for stricter trade and immigration policies under a trump administration is also a concern. on monday and tuesday, volume surged on bearish options tracking s&p 500 technology stocks. the number of puts on the technology select sector spdr fund that changed hands monday was the highest in at least five years, according to trade alert data. meanwhile, bullish call volume on the exchange-traded fund was in line with the average this year. some selling may be stock-specific. mr. trump called out apple inc. on the campaign trail in february, for instance, saying consumers should boycott the company after apple refused to help the u.s. government unlock a killer<u+2019>s iphone. apple stock is down 3.6% since the election. mr. trump also has spoken about restricting immigration. daniel morgan, senior portfolio manager at synovus trust co., said mr. trump<u+2019>s immigration plans as president could affect visa programs, making it more difficult for engineering and other tech talent to work in the u.s. trade limits also could hurt big technology companies that derive a large percentage of their revenues overseas, he said, particularly for companies with large cross-border commerce such as facebook and amazon.com. facebook derives roughly half of its revenue from outside the u.s. and canada, according to regulatory filings, while the broader s&p 500 derives roughly 30% outside the u.s., according to factset estimates. other potential policies could help the sector, some analysts said. one stance mr. trump has promoted is efforts to bring hundreds of billions of dollars that companies hold overseas back to the u.s. through lowered repatriation tax rates. that in turn could create more business spending and potentially more mergers and acquisitions, said harald hvideberg, a portfolio manager at eagle asset management in st. petersburg, fla. furthermore, he said the recent swings in technology may not have much to do with the sector<u+2019>s prospects at all. <u+201c>there<u+2019>s a rotation into a lot of industrials, health care, banks, financials that might benefit from rising rates. what do you sell? maybe you sell something that<u+2019>s done really well,<u+201d> mr. hvideberg said. while financial stocks have rallied since election day as investors bet on looser regulations and higher interest rates, they rose less than 0.1% in the s&p 500 on tuesday. longer-term government bonds extended their slide. the yield on the 10-year u.s. treasury note increased to 2.240%, from 2.224% on monday, and posted its largest six-day yield gain since december 2010. yields move inversely to bond prices. short-term debt fell after data from the commerce department showed a rise in october retail sales. the yield on the two-year treasury note rose to 1.008%, its highest level since jan. 5 and up from 0.988% monday. a stronger economy bolsters the case for the federal reserve to raise interest rates, which makes government bonds less appealing to hold. <u+201c>we may be in for a bit of a tussle here,<u+201d> said scott colyer, chief executive and chief investment officer of advisors asset management, who added that he expects bond prices will remain lower for the foreseeable future. the wsj dollar index, which measures the dollar against a basket of 16 other currencies, rose for a seventh consecutive session, edging up less than 0.1%. <u+2014>inyoung hwang contributed to this article. write to corrie driebusch at corrie.driebusch@wsj.com
tech stocks miss out on trump bump - wsj
corrie driebusch