Investors may want to press the buy button the next time technology stocks sell off.
Kristina Hooper of Invesco believes that the group plays a key role in the aspirations of American companies to increase productivity.
“In the long run, technology will benefit from increased corporate spending,” the company’s chief global market strategist told CNBC’s “trade nation” on Friday. “There is a lot of excitement there.”
But she suggested that investors need some patience.
“We may not see it in the short term because of rising yields,” Hooper added.
Wall Street’s interest in technology is waning, mainly because the 10-year US Treasury bond yields are rising. In Friday’s trading, the yield hit a high of 1.617%-the highest level since June 4. Growth stocks, including technology, generally underperform in an environment of rising interest rates because it puts pressure on profits.
In the past four weeks, the Nasdaq index, which is dominated by technology stocks, has fallen more than 5% from the historical high set on September 7. It fell 74.48 points on Friday to close at 14,579.54 points. But the index rose by 0.09% every week, barely maintaining a positive performance.
Hooper admits that the recent background is conducive to cyclicality rather than technology. However, she believes this is temporary and hopes to see significant benefits from software to network security.
“Personal expenses will also increase. Household net worth will increase,” she pointed out.
In order to take advantage of the bullish trend and lock in strong profits, Hooper recommends a time frame of 3 to 5 years.
“This is a great mid-to-long term game,” Hooper said.