Biotech ETF breaks out as U.S. small-cap tech lags.

TLDR:

• Biotech ETFs such as XBI, BBC, and SBIO are seeing significant gains in 2024.
• Small-cap technology stocks are lagging behind U.S. large-cap equities.

In 2024, several biotech ETFs, including XBI, BBC, and SBIO, have seen significant gains. The SPDR S&P Biotech ETF has surged over 10% year-to-date, with major components like biotech and retail stocks breaking out to two-year highs. On the other hand, small-cap technology stocks are lagging behind U.S. large-cap equities, with the Invesco S&P SmallCap Information Technology ETF falling 3.6% year-to-date despite a 0.9% increase in February.

DataTrek Research points out that small-cap tech stocks usually outperform small-cap equities but have been underperforming recently. However, history suggests that small-cap tech stocks may revert to the mean and outperform in the next few months. Overall, large-cap tech and U.S. large-cap equities are currently favored over small-cap counterparts in the market environment.