Is Rally In Technology Sector Sustainable?

As evidenced by the above (courtesy of StockCharts.com), the technology-laden Nasdaq Composite index has been on a tear since March and has outperformed the S&P 500 since last November.

According to the conventional wisdom, that would indicate that stock investors see a much brighter future ahead for the technology sector, right?

I guess that also means the head of one of the largest technology companies in the world, as detailed in the following Associated Press report, “Microsoft CEO: IT Spending Won’t Fully Recover,” doesn’t know what he is talking about.

Microsoft CEO Ballmer says technology spending won’t recover to pre-crisis levels

Microsoft CEO Steve Ballmer said Monday corporate spending on information technology will not recover to levels seen in recent years before the global economic slowdown.

“The economy went through a set of changes on a global basis over the course of the last year which are, I think is fair to say, once in a lifetime,” Ballmer told a meeting of South Korean executives in Seoul.

Spending on information technology, which accounted for about half of capital expenditures in developed countries before the crisis, was unlikely to rebound fully because capital was more scarce these days, he said.

“While we will see growth, we will not see recovery,” Ballmer said.

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