ServiceNow Slump Drags Down Tech Fund as Most Sectors Rise

EasyAlpha grades the stocks across the sector against their industry peers, and only 38.3% of the fund's weight sits in companies graded A or B. Breadth across the group was narrow on Thursday, October 29, with only 40.5% of its member stocks advancing even as 8 of the 11 sectors rose across the wider market. The Information Technology sector closed -0.9%, while the Technology Select Sector SPDR Fund, an exchange-traded fund that tracks the group under ticker XLK, closed -1.2%. That move was driven by sharp weakness at the bottom of the roster, where ServiceNow Inc closed -27.0%. ServiceNow plunged after the enterprise software provider missed quarterly earnings estimates and issued fourth-quarter revenue guidance below Wall Street expectations.

The drop in ServiceNow reverberated through the broader software industry, where slowing subscription backlog growth raised doubts about forward expansion. Alongside the quarterly profit miss, broader concerns over potential artificial intelligence disruption pulled down software valuations across the sector.

Pockets of strength still appeared within the sector. Gen Digital Inc. finished +15.8% after raising its full-year revenue and profit guidance. The consumer cybersecurity company posted double-digit revenue expansion and pointed to record customer growth. Semiconductor supplier NXP Semiconductors NV also advanced, ending +5.7%.

The concentration of losses in select software names also shaped the difference between weighting methods. On an equal-weighted basis, the sector closed -1.2%, compared to the cap-weighted sector result of -0.9%. Because the cap-weighted measure held up better than the equal-weighted version, the largest technology holdings in the index helped cushion the group against the steeper declines felt across the median stock.

At a closing price of $188.72, the vehicle has pulled back over the past month, but it stands at +4.4% over the past 100 sessions.