March 29, 2013, 2:50 PM — Though IT trailed other sectors as market indices rose to milestone highs this quarter, some bright spots in earnings and market research reports this week indicate continuing confidence that things will go better for tech this year than in 2012.
Trading was suspended Friday for the Good Friday holiday in the U.S. before the Easter weekend, but on Thursday the Standard and Poor's 500-stock Index rose 6.24 points to end the first quarter at 1,569.19, its highest point ever in nominal terms (not taking into account inflation). The prior high was in October 2007, before the recession. Three weeks ago the Dow Jones Industrial average broke its prior nominal high, also set in October 2007.
Though tech stocks are up for the year, they have not risen as fast as those in other sectors. The Nasdaq Computer Index, up 2.4 percent for the year, is the slowest-growing sector on the tech-heavy exchange. In comparison, Nasdaq industrials are up 11.85 percent and banks are up 11.18 percent.
In general, investors appear to be focusing on good U.S. economic news and shrugging off bad news elsewhere, such as the European plan to make bank depositors in Cyprus share the burden of bailing out the country's biggest banks.
"In 2011, a Cyprus hiccup would have taken the market down a lot. Today, the market yawns and keeps going," said Leon LaBrecque, founder of LJPR, an investment management firm, in email. "All we can say is that this quarter, it closed at record highs despite a lot of headwinds."
The U.S. Department of Commerce said this week that the gross domestic product increased in the fourth quarter of 2012 by 0.4 percent, up higher than prior estimates of 0.1 percent. The Commerce Department has also reported that employers have added about 200,000 jobs a month since November, bringing the unemployment rate to 7.7 percent by the end of February, a four-year low.
Though the good news has not sparked a big jump in tech stocks relative to other sectors, guarded optimism about IT prevails.
Worldwide IT spending is projected to total US$3.8 trillion in 2013, a 4.1 percent increase from 2012 spending, according to the latest forecast by Gartner. Some areas of tech will lag behind, however.
"The Nexus of Forces -- social, mobile, cloud and information -- are reshaping spending patterns across all of the IT sectors," said John Lovelock, research vice president at Gartner, in the report. "The ratio of this mix is changing dramatically and there are clear winners and losers over the next three to five years."