Change Is Coming Fast

By Alex Eule |  Wednesday, May 6

Tech Shines. As the bad news about jobs piles up -- with more terrible data still to come tomorrow and Friday -- stocks had another dismal day. The Dow Jones Industrial Average fell 218 points, or 0.9%, Wednesday, while the S&P 500 dropped 0.7%. Just one S&P 500 sector finished the day in positive territory. By now, you can probably guess which one -- the tech sector finished up 0.8%, helping to push the tech-heavy Nasdaq Composite into positive territory. It rose 0.5% on the day.

Amazingly, the Nasdaq is now down just 1.3% on the year, versus respective losses of 17% and 12% for the Dow and S&P 500.

At a high level, the coronavirus shutdown has accelerated the tech transformation that was already under way in recent years. Microsoft CEO Satya Nadella made that point during the company's earnings call last week:

"As Covid-19 impacts every aspect of our work and life, we have seen two years' worth of digital transformation in two months. ... There is both immediate surge demand and systemic structural changes across all of our solution areas that will define the way we live and work going forward."

Microsoft and Amazon.com could be the leading examples of tech-driven business models that are managing to thrive in the current environment. Their stocks are up 16% and 27%, respectively, this year. But there are plenty of smaller tech names doing the same. Shares of Peloton Interactive are up 34% one the year. The at-home fitness company closed at an all-time high Wednesday, before reporting better-than-expected results this evening. The stock was up another 10% in after-hours trading.

Shopify, which powers e-commerce sites for small businesses and existing bricks-and-mortar retailers, jumped 6.9% after the company reported a surprise profit for the first quarter. The company said that the number of stores created in three days or less was up 85% between March 13 and April 24, versus the six weeks prior. 

Shopify CEO Tobias Lütke said: "I really believe that when it comes to the retail industry -- maybe it's not 10 years -- but we've just jumped a lot of years in the future."

Shopify's stock is up 85% this year.