Enterprise Software Stocks Defy Rising Rates in Wednesday Trading
Enterprise software stocks are bucking the trend in Wednesday's trading session as they rise despite long-dated Treasury yields reaching nearly two-decade highs. The iShares Expanded Tech-Software Sector ETF (NYSEARCA:IGV) is up 1% while the Invesco QQQ Trust (NASDAQ:QQQ) falls 0.88%, with the software group moving in the opposite direction of the tech complex.
Atlassian Corporation (NASDAQ:TEAM) stock leads the pack, climbing 3% to $194.56 after announcing it has accelerated its public sector cloud investments by six months and will submit its federal security authorization earlier than expected. The company also committed to a fully disconnected, air-gapped deployment of its core platform for government customers with sensitive workloads.
Monday.com (NASDAQ:MNDY), Salesforce (NYSE:CRM), and ServiceNow (NYSE:NOW) are also up, each gaining 3% or more in Wednesday's trading. While Monday.com, Salesforce, and ServiceNow have no company-specific disclosures to explain their gains, the sector rotation is seen as a likely explanation for their outperformance.
However, investors are advised to be cautious, as the rally could reverse quickly if long-dated rates continue to rise. The group's lead over the large-cap technology fund may narrow back toward the usual pattern where higher yields drag on both sectors.