Financials vs. Technology Stocks – Which Sector Leads?

financial stocks leadership chart year 2021_xlf to xlk etf ratio performance investing analysis

The financials sector $XLF has long underperformed the technology sector $XLK. But something changed in September 2020, and with rising interest rates and frothy tech valuations, this ratio has been favoring financials. What’s next for these two sectors, and should investors lean more toward growth or value?

In today’s video, we’ll review the long-term relationship of these two key sectors, and why value-oriented sectors like financials could continue to outperform in the coming months. Here are some talking points in the video:

Why the long-term outperformance of the technology sector may not re-emerge until later in 2021.

How rising interest rates and a steepening yield curve set up well for financials to outperform in the coming months

How this ratio relates to the growth vs. value debate, as well as mega cap stocks like JPMorgan Chase $JPM and Apple $AAPL?

For deeper dives into market awareness, investor psychology and routines, check out my YouTube channel!

One Chart: $XLF Financials vs $XLK Technology [VIDEO]

Twitter:  @DKellerCMT

The author owns a long position in ATVI at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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