June 28, 2013, 4:58 PM — Closing out June, tech stocks are up for the year but have not enjoyed the full fruits of a bull market that has boosted the Dow to its best first half since 1999, right before the dot-com crash.
The tech sector also faces what some analysts predict to be a rough few quarters, amid doubts about the economy and market forecasts for a tough year for tech sales.
Tech stocks were up Friday, with the Nasdaq Computer Index, which tracks more than 300 tech-related stocks, closing at 1615.46, up 2.21 percent. It was a mixed day of trading, however. Of the five tech bellwethers on the Dow Jones Industrial Average, Intel and Hewlett-Packard closed up for the day, while IBM, Microsoft and Cisco were down.
Unusually, compared to what's been happening so far this year, tech was up while other sectors were down Friday. The Dow and the Standard and Poor's 500 were both down for the day.
The market as a whole has done well this year so far, however, despite recent turbulence caused by remarks from the Federal Reserve Board. Since May, Fed officials have cautioned that as the economy shows signs of recovery, they may wind down initiatives mean to fuel the recovery from recession. These include the Fed's policy of maintaining low interest rates as well as its "quantitative easing" program of buying about US$85 billion in bonds per month to boost the stock market.
Last week, for the first time, Fed Chairman Ben Bernanke laid out a timeline for winding down purchases of mortgage bonds and treasuries, possibly next year. The remarks led to a big stock selloff, with the broad Standard and Poor's 500 index declining 2.5 percent last Thursday, its worst drop up to that point since November 2011. Still, stocks have done well this year, with the Dow up by about 14.5 percent and the S&P up about 13 percent. In comparison, the Nasdaq Computer Index is up only 4.5 percent for the year.
It's a far cry from last year, when tech led markets for much of the year. This year, forecasts of relatively slow sales have hurt confidence in tech. The hardware sector is especially under pressure as users spend more time on tablets and smartphones, eschewing pricier desktop and notebook computers.
This week, Gartner forecast that worldwide desktop and notebook computer shipments will total 305 million units in 2013, a 10.6 percent decline from 2012. It expects the PC market including ultramobiles to decline by 7.3 percent.
The downward trend is offset by tablet shipments, which are expected to increase 67.9 percent, reaching 202 million units, while the mobile phone market will grow 4.3 percent, with shipments of more than 1.8 billion units, Gartner said.
So while there is good news amid the gloom, the shift from traditional PCs represents a wrenching shift for the market.