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Quarter-End Insights

Opportunities Are Arising in Software and Cybersecurity

Compared with the previous quarter, patient investors have some good opportunities.

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Like the broader stock market, technology stocks sold off at the end of the first quarter over concerns about COVID-19 and the likelihood of a recession in 2020. As of March 26, the Morningstar US Technology Index was still up 10.5% on a trailing 12-month basis, outperforming the U.S. equity market, which declined 6.4%. Year to date, technology was again an outperformer during the bear market, down 10.3% compared with the broader U.S. equity market, which was down 19.1%. Before COVID-19 concerns, tech fared well in late 2019, with optimism that the U.S. and China can reach trade agreements and avoid a full-blown trade war, an issue that weighed on tech in late 2018 and at times in 2019.

Tech outperformed the market at the start of the COVID-19 sell-off. - source: Morningstar

Brian Colello does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.