By William Power
Save us, tech stocks.
That seems to be the plea of mutual-fund investors, and stock investors in general. At an uncertain time for markets -- with recession and inflation concerns, even after the debt-ceiling resolution -- investors have flocked to large technology stocks as a refuge.
In particular, enthusiasm has grown for stocks of companies building artificial-intelligence technologies, such as Nvidia -- whose stock is up 169% so far this year.
The result is that the technology-stock-focused Nasdaq Composite Index has soared 27% so far this year. Accordingly, funds focusing on large-cap growth stocks, many of them the big techs like Nvidia as well as Facebook parent Meta Platforms, are up an average of nearly 20% for the year, including a 4.4% rally in May alone, according to Refinitiv Lipper data.
In addition, Lipper's science and technology category is up 25.6% so far, including 9.4% in May alone.
But that tech frenzy hasn't benefited stock funds overall.
The average U.S.-stock fund fell 0.9% in May, to trim the year-to-date gain to 4.8%. Some of those declines were because of the rout in regional bank stocks.
So while the overall stock market has delivered solid returns so far this year, specific areas continue to struggle.
"For example, small-caps have underperformed large-caps, and cyclicals are weaker than their defensive neighbors," says John Lynch, chief investment officer for Comerica Wealth Management in Charlotte, N.C. "Value has lagged growth these past several months, though risks remain including the possibility of recession in the coming months," Lynch says.
International-stock funds fell 3.6% in May, to trim the year-to-date advance to 6.6%.
Bond funds fell. Funds focused on investment-grade debt (the most common type of fixed-income fund) declined an average of 1.1%, to trim the year-to-date gain to 2.5%.
William Power is a Wall Street Journal features editor in South Brunswick, N.J. Email him at william.power@wsj.com .
(END) Dow Jones Newswires
June 03, 2023 12:00 ET (16:00 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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