Trade wars and regulatory threats challenge tech leadership as the market flirts with a new high

When the bull market has its last hoorah, most likely technology and internet stocks will be at the top of the hill, leading the charge.

But before that, analysts have diverging views on how much and which names investors should hold in a group of stocks that are dogged by regulatory issues, trade war conflicts and earnings pressures.

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The S&P information technology sector was unchanged Tuesday, coming right after a heady five-day run, where it gained 9%. That was a bounce after the sector’s 10.6% loss from May 3 to early June. The losses in that period outpaced the S&P 500′s 6.8% decline but tech has regained 8.5% since June 3. In the same period, the S&P has bounced back by 5.1%, and at 2,885, is edging closer to its all-time high of 2,954.

We’re still pretty cautious. [Tech] had a rebound, but if you look beyond [those] five days, it’s a pretty big underperformer, A part of this is a reversal based on sentiment.

said Dan Suzuki, portfolio manager with Richard Bernstein Advisors.

Tech has been hit by worries about the trade war with China, and semiconductors were suffering a supply/demand imbalance in the beginning of the year. Internet names, in particular, have been overshadowed by a wave of regulatory interest from everyone from Congress to the Justice Department, state attorneys general and even the G-20, which wants to create new rules for taxing the digital companies globally.

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