The technology sector has gotten off to a sluggish start to the year by its own standards. The tech-heavy Technology Select Sector SPDR ETF (NYSEARCA: XLK) is up just 2.8% year-to-date (YTD), while the Invesco QQQ Trust (NASDAQ: QQQ) has also struggled to gain traction. That’s notable given the sharp rally in memory chip stocks, which both ETFs have exposure to.
So what’s holding tech back? The answer primarily comes down to weighting. Both XLK and QQQ are heavily concentrated in mega-cap technology stocks, namely the Magnificent Seven, which have underperformed so far this year. As a result, despite pockets of strength in the sector, the broader tech complex has remained stuck in a consolidation phase.
