Information Technology

The Information Technology Sector covers the following general areas: firstly, Technology Software & Services, including companies that primarily develop software in various fields such as the Internet, applications, systems, databases management and/or home entertainment, and companies that provide information technology consulting and services, as well as data processing and outsourced services; secondly Technology Hardware & Equipment, including manufacturers and distributors of communications equipment, computers & peripherals, electronic equipment and related instruments; and thirdly, Semiconductors & Semiconductor Equipment Manufacturers.

Last % Change Market Cap Market Weight Weighting Recommendations
S&P Capital IQ Ned Davis Research (PDF) Log in required.
-0.19% $9.10T 24.54% Marketweight

Sector Commentary from Standard & Poor's

<p>CFRA recommends marketweighting the S&P 500 information technology sector. Year to date through December 31, 2017, the S&P 500 information technology index, which represented 24.2% of the S&P 500 index, was up 36.9% in price, compared with a 19.4% rise for the S&P 500. In 2016, this sector index rose 12.0% versus a price advance of 9.5% for the 500. There are 13 sub-industry indices in this sector. Internet software & services is the largest, representing nearly 21% of the sector's market value, while electronic equipment & instruments is the smallest, accounting for 0.12% of the sector.</p><p>The cap-weighted average of this sector's component company CFRA STARS (STock Appreciation Ranking System) is 3.4 out of 5.0, as compared to a cap-weighted average of 3.5 for the S&P 500. The sub-industries within this sector that currently show the highest average STARS are IT consulting & services, semiconductors, technology distributors, and technology hardware, storage & peripherals. Those with the lowest average STARS include application software, communications equipment, data processing & outsourced services, electronic components, electronic manufacturing services, and home entertainment software. According to S&P Capital IQ Consensus Estimates, the sector is projected to record a 11.8% year-over-year increase in operating earnings per share in 2018, as compared with the S&P 500's estimated EPS gain of 13.6%. During 2016, this sector is expected to report a 19.6% rise in EPS versus a 10.8% increase for the S&P 500. In addition, revenues for the sector are forecast to increase by 10.1% in 2018 versus the S&P 500's projected rise of 5.8%. The sector's price-to-earnings ratio of 19.3X, based on consensus 2018 operating EPS estimates, is above the S&P 500's forward P/E of 18.6X. S&P Capital IQ also reports that the consensus long-term EPS growth estimate for this sector is 14.3% versus the S&P 500's 12.9%, giving the sector a P/E-to-projected EPS growth rate (PEG) ratio of 1.5X, which is slightly lower than the broader market's PEG of 1.6X. Finally, this sector pays a dividend yield of 1.2%, as compared with the yield of 1.8% for the S&P 500.</p><p>CFRA's proprietary technical indicator for this sector currently shows a positive reading. In researching the past market history of prices and trading volume for each company, CFRA's computer models apply special technical methods and formulas to identify and project price trends for the sector.</p><p>/Sam Stovall<p>


Understanding Weighting Recommendations

Sector weighting recommendations are provided by independent, third-party research firms to help further refine your analysis.

Some sectors get "over," "market," or "under" weighted, which means that the research firm recommends that more, the same, or less of the sector should be held in your portfolio than is held in the market.

Learn more about the average recommendation holding period and methodology of the research firms:

View weighting recommendations for all sectors


U.S. Sectors & Industries Performance is represented by the S&P 500 GICS® (Global Industry Classification Standard) indices. Last % change is the nominal change in the price of the index from the previous trading day's close expressed as a percentage as of the index value at the time noted in the Date & Time field. All dates and times are reported in ET.

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GICS is an industry classification system developed by Standard & Poor's in collaboration with Morgan Stanley Capital International (MSCI). S&P uses GICS to determine the market segment to which a company is assigned. A company is assigned to a single GICS industry according to the definition of its principal business activity as determined by Standard & Poor's and MSCI. Revenues are a significant factor in defining principal business activity; however, earnings analysis and market perception are also important criteria for classification. There are currently 10 sectors and 68 industries. Three of the 68 industries do not have companies represented in the S&P 500 Index; therefore, performance is not available for Marine, Transportation and Infrastructure, and Water Utilities.

Standard & Poor's 500 (S&P 500) Index is an unmanaged market-weighted index of 500 of the nation's largest stocks from a broad variety of industries. The S&P 500 represents about 80% of the total market value of all stocks on the New York Stock Exchange. Market-weighted means that component stocks are weighted according to the total value of their outstanding shares.

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