Equities: Tech sector results drive market recovery – Danske Bank
US Stock Market Sees Strong Recovery Led by Tech Sector
The Danske Research Team highlights a robust bounce-back in US equity markets, with the S&P 500 climbing 1% and technology stocks at the forefront of the rally. US software companies experienced notable gains, fueled by optimism for a solid first-quarter earnings season. Market consensus anticipates S&P 500 earnings to rise by 12%, while the tech sector could see earnings soar by nearly 40%. Additionally, tech shares are trading at a significant valuation discount compared to industrials.
Technology Drives Market Momentum as Earnings Season Approaches
Although futures markets initially suggested a subdued start, US equities staged a strong comeback. The S&P 500 advanced by 1%, with the Nasdaq and Russell 2000 small-cap index each gaining close to 1.5%. European and Nordic stocks, which opened the day down by 1%, managed to recover and finished the session relatively flat.
One of the main catalysts for this upswing, aside from geopolitical factors, was the performance of technology stocks. US software shares jumped 5.4% in a single day, with companies such as Oracle surging 13%. While the exact reason for this surge is unclear, anticipation surrounding the upcoming earnings season likely played a significant role.
Analysts expect another strong quarter for US companies. Projections indicate that S&P 500 earnings will grow by 12% in the first quarter, with 9% of that growth coming from revenue increases. The technology sector stands out, with forecasts pointing to almost 40% year-over-year earnings growth.
Notably, software company valuations have already adjusted to align more closely with the broader market. Globally, the tech sector—including hardware—now trades at over a 15% discount to industrial stocks, even though tech is projected to expand earnings by 40% in Q1, while industrials are expected to see minimal growth.
This year, earnings estimates for tech companies have been revised sharply higher—2026 forecasts have risen by 15% since the start of the year—whereas industrials have not seen any upgrades. The combination of rapid earnings growth and an unprecedented valuation gap is likely to draw increased attention from investors.
(This report was produced with assistance from artificial intelligence and reviewed by editorial staff.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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