Tech earnings to test markets’ ‘most crowded’ trade this week

A blistering rally in megacap growth and technology shares has buoyed markets this year, and earnings reports in coming weeks could help investors determine if those gains are justified.

US technology stocks are currently the “most crowded” trade in the market, fund managers surveyed by BofA Global Research said, as investors pile into megacaps thinking the Federal Reserve will soon stop tightening monetary policy and that the sector will remain resilient as growth slows.

Rallies in stocks such as Apple Inc, Microsoft Corp and Tesla Inc have helped sustain broader indexes in the face of recession worries and last month’s banking crisis sparked by the collapse of Silicon Valley Bank and Signature Bank.