By Christine Idzelis
‘Long U.S. tech feels like the one trade that stands apart from the obvious post-ceasefire playbook’
The U.S. stock market rallied after the cease-fire agreement with Iran was announced, but it remains down in 2026 through Wednesday.
A shaky cease-fire agreement between the U.S. and Iran has helped stocks rally from year-to-date lows reached late last month. As investors try to figure out where to put their money, some see battered Big Tech names as among the most compelling opportunities out there right now.
Viraj Patel, global macroeconomic strategist at Vanda Research, said in commentary shared with MarketWatch on Thursday that he has seen reports of some funds warming to the Big Tech trade once again. Before the U.S. and Israel began their bombardment of Iran on Feb. 28, crowding in tech names had fallen substantially, Patel pointed out, as the so-called artificial-intelligence scare trade and concerns about aggressive data-center investment caused performance to cool.
“Long U.S. tech feels like the one trade that stands apart from the obvious post-ceasefire playbook. What makes it especially interesting is that it’s a pretty uncrowded idea that is starting to gain traction,” Patel said in written commentary shared with MarketWatch. He also described Big Tech names as “low-hanging fruit” and noted that retail investors have again started to buy shares of Apple (AAPL) and Microsoft (MSFT) – both members of the “Magnificent Seven” group of elite megacap tech stocks.
Shares of Palantir Technologies (PLTR), another tech favorite that has cooled off in 2026, saw the heaviest buying in months on Wednesday, Patel added.
The tech-heavy Nasdaq Composite Index rallied hard on Wednesday, gaining 2.8%, as corners of the market that had been among the hardest-hit in 2026 surged into the lead during a torrid snapback rally.
Patel isn’t alone in viewing technology – particularly members of the Magnificent Seven like Microsoft, Alphabet (GOOG) (GOOGL) and Nvidia (NVDA) – as a potentially attractive opportunity. Mike Wilson, an equity strategist at Morgan Stanley, said in commentary shared with MarketWatch earlier this week that relatively cheap valuations for these stocks were making them “quite interesting.”
See: As stocks approach a true comeback, here’s where investors can find the richest opportunities
Not just a valuation story
Attractive valuations aren’t the only reasons Big Tech stocks could jump back into the lead in the coming months. Since the start of the bull market, Big Tech has come out on top following previous stock-market selloffs, including the ructions that followed the collapse of Silicon Valley Bank and the April 2025 tariff announcement.
Oil prices remained high on Thursday, with U.S.-traded West Texas Intermediate crude for May climbing back above $100 a barrel. High energy prices could make it difficult for small-cap stocks and certain cyclical areas of the market to continue outperforming, said José Torres, senior economist at Interactive Brokers, as consumers feel the pinch from higher prices.
Related inflation concerns could still keep the Federal Reserve from cutting interest rates, he cautioned, robbing small caps and other interest-rate-sensitive stocks of a key source of support.
Also, the rise in U.S. stocks on Wednesday may have been driven partly by traders unwinding short positions, meaning it’s not just about bullish optimism.
Wednesday was “more short covering than convicted bulls buying,” Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, said in a phone interview. But “we think tech will do well regardless of what happens” in the next two weeks under the agreement to pause fighting in the Middle East as a peace plan is negotiated, he said.
“Really, it comes back to AI,” with “robust” spending on artificial intelligence likely to benefit tech stocks while earnings in the sector continue to climb, according to Samana. Wells Fargo Investment Institute said it is overweight information technology, while maintaining an unfavorable view of consumer sectors.
Enthusiasm for tech-related stocks is returning as analysts have raised earnings expectations while the recent selloff in the stock market has left them looking less expensive – making them more attractive as a buying opportunity, according to Torres.
The Invesco QQQ Trust Series I QQQ, a popular exchange-traded fund that tracks the tech-heavy Nasdaq composite, jumped 3% Wednesday. But shares of the ETF – whose largest holdings are Big Tech stocks including Nvidia, Apple, Microsoft, Amazon.com (AMZN), Google parent Alphabet Inc., Tesla (TSLA) and Meta Platforms Inc. (META)- remained in the red so far this year with a 1.3% loss, according to FactSet data. The Nasdaq-100, the index that QQQ aims to track, hasn’t put in a record high since October.
By contrast, small-cap stocks as measured by the Russell 2000 index RUT are up this year. The iShares Russell 2000 ETF IWM surged 3% on Wednesday, for a year-to-date gain of 5.6%, according to FactSet data.
Large-cap growth stocks in the S&P 500 “should have the edge” over value equities over the next 100 days, following extreme outperformance of large-cap value based on trailing 100-day price returns – provided that Middle East tensions begin to dissipate, said Nicholas Colas, co-founder of DataTrek, in commentary shared with MarketWatch on Wednesday.
“Investors with an above-average level of risk tolerance should consider buying growth here,” Colas said. “We ourselves would like to see clear and lasting signs of deescalation between the U.S. and Iran before favoring one style over the other.”
The Vanguard Growth ETF VUG, which is heavily exposed to Big Tech, has recently cheapened relative to the Vanguard Value ETF VTV.
The price ratio of the Vanguard Growth ETF to the Vanguard Value ETF hit 2.18 on March 30, its lowest point this year, according to Dow Jones Market Data. That marked the lowest ratio of growth to value since April 22, 2025, as seen in the chart below.
The top five holdings of the Vanguard Value ETF at the end of February were Berkshire Hathaway (BRK.B), JPMorgan Chase (JPM), Exxon Mobil (XOM), Johnson & Johnson (JNJ) and Walmart (WMT), according to data on Vanguard’s website. Shares of oil and gas giant Exxon Mobil (XOM) have surged almost 30% this year, even after falling 4.7% Wednesday, FactSet data show.
Energy XX:SP500.10 was the sole sector of the S&P 500 that dropped Wednesday, slumping 3.7% as oil prices declined. West Texas Intermediate crude (CL00) was down almost 15% at around $96 a barrel that same day but remained up 61% over the 12 months, according to FactSet data.
The Iran conflict has prompted investors to hedge exposure to higher oil by going long on energy stocks, Matthew Stucky, chief portfolio manager of equities for Northwestern Mutual Wealth Management, said in an interview. That trade appeared to flip on Wednesday, with investors selling energy stocks, while those who had been short other parts of the equities market – or betting that securities in those pockets would fall – may have been unwinding such bets, he said.
In covering, or closing out, short positions, traders buy the shares they had been betting might decline. That might help explain the stock market’s gain on Wednesday, according to Stucky.
Other sectors that had been hard-hit recently could also be poised for a sharp rebound, if Wednesday’s trading action is any indication. The S&P 500’s largest sector, tech XX:SP500.45, climbed 2.8% on Wednesday. But the biggest gain came from industrials XX:SP500.20, a cyclical sector that jumped nearly 3.8%.
Communications services XX:SP500.50 and materials XX:SP500.15, another cyclical sector, had the next biggest climbs, each up 3.4%, FactSet data show.
U.S. indexes were modestly lower in early trading on Thursday, although stocks were still hanging on to most of their gains from Wednesday. The S&P 500, Dow Jones Industrial Average and Nasdaq were all in the red for the day.
Joseph Adinolfi contributed.
-Christine Idzelis
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
04-09-26 1134ET
Copyright (c) 2026 Dow Jones & Company, Inc.