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Investors may want to hit the buy button the next time tech stocks are sold.
Kristina Hooper of Invesco argues that the group plays a crucial role in the desire of American companies to increase their productivity.
“Longer-term technology is going to benefit from increased spending by businesses,” the company’s chief global market strategist told CNBC’s “Trading Nation” on Friday. “There is a lot of excitement there.”
But she suggests investors will need patience.
“We might not see it in the short term just because yields are going up,” Hooper added.
Wall Street’s affinity for technology is declining primarily because the yield on 10-year Treasuries rises. The yield hit a high of 1.617% in Friday’s session – its highest level since June 4. Growth stocks, which include tech, typically underperform in a rising rate environment as this puts pressure on earnings.
Over the past four weeks, the tech-rich Nasdaq has lost more than 5% of its all-time high, reached on September 7. He lost 74.48 points on Friday to close at 14,579.54. But the index achieved a positive weekly performance, gaining 0.09%.
Hooper recognizes that the short-term environment favors cyclical stocks over technology. However, she believes it’s temporary and expects areas ranging from software to cybersecurity to see significant benefits.
“There will also be more spending by individuals. Household net worth is high,” she noted.
To take advantage of the uptrend and secure robust earnings, Hooper recommends having a 3-5 year horizon.
“It’s a great game in the medium to long term,” said Hooper.
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