Tech Falls as Mega-Cap Gains Fail to Lift the Sector

The Information Technology sector moved -1.0% on Thursday, September 10 as breadth weakened across the group, with only 31.4% of its companies recording gains. Technology Select Sector SPDR Fund (XLK), an exchange-traded fund tracking the sector, closed -1.4% at $185.21. The decline was milder in the cap-weighted sector than in its equal-weighted equivalent, which recorded -1.4%, because resilience in top names such as Apple Inc. (+3.6%) cushioned the fund against deeper drops in laggards like Hewlett Packard Enterprise Co (-6.2%). Currently, 43.1% of the fund's graded holdings sit in A or B quality tiers. Broader equity markets declined after surging crude oil and higher Treasury yields weighed on major indexes. Selling across Wall Street broadened as wholesale inflation climbed to 5.4%.

Individual performance diverged sharply across the sector, with Hewlett Packard Enterprise Co (-6.2%) pacing the downside. Meanwhile, gains were led by Apple Inc. (+3.6%) and Applovin Corp (+3.1%). Among individual holdings, Microsoft introduced natural language application tools in Copilot. Separately, ASML expanded its high numerical aperture lithography partnerships with Samsung and Intel. Nevertheless, macroeconomic headwinds dominated trading, leaving technology among the majority of decliners across the broader market, where 2 of the 11 sectors rose.

In the technology group, 43.1% of graded assets carry an A or B grade. Companies graded A or B have stronger fundamentals and historically have carried a lower risk of large drawdowns than companies graded D or E. Over a longer horizon, the sector retains solid momentum: XLK sits at +19.8% over the chart window and -0.5% over the past month.

For investors tracking the sector through XLK, the vehicle manages $121.4 billion in net assets with an expense ratio of 0.08%. The heavy concentration in premier tech names provides liquidity and low running costs, but also means sector outcomes remain closely tied to a handful of large holdings when broader market breadth narrows.