Technology in the Spotlight

As the Q2 earnings season unfolds, investors will be watching the Technology sector closely.

(click to expand)

After outperforming the broader market for most of the year (see Technology Pulls Ahead from early April) technology stocks will now need to deliver on anticipated improvement in earnings performance.  For more on Q2 earnings, see Mark Gongloff’s Crunch Time: How Tough is Tech?.

State Street’s Technology Select Sector SPDR Fund (XLK) is up 13% in 2009 compared to down 2% for the broader market as represented bySPDR S&P 500 (SPY).  XLK top holdings and expected earnings dates include Microsoft (July 23), AT&T(July 23), IBM (July 16), Apple (July 21) and Cisco (August 5).

The health of technology earnings can be a leading indicator of the business cycle as companies generally invest in technology to accomodate business growth before hiring additional employees.

Other tech heavy ETFs include iShares’ Dow Jones U.S. Technology Sector Index Fund (IYW) and theVanguard Information Technology ETF (VGT).

For more, see the ETF Directory for a complete listing of Industry ETFs.