Mega-cap tech stocks have driven market gains, particularly in the S&P 500 (^GSPC). But amid Big Tech players reporting earnings, is this rally solely exclusive to the technology sector?

UBS Asset Management Asset Allocation Strategist Luke Kawa joins Yahoo Finance Live to comment on where market rallies could broaden out to.

"Just by virtue of the weight that these names have, and the extent to which earnings are growing faster than the rest market," Kawa says. "For instance, if you're looking at measures of advanced decline lines... those pretty much peaked late last year and have been edging lower."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

- Well, with so much focus on the Magnificent Seven, investors may be looking beyond mega-cap stocks to help better position themselves. For more, let's welcome in Luke Kawa, UBS asset management, asset allocation strategist and former colleague of mine at Bloomberg once upon a time.

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Luke, everybody keeps talking about broadening beyond big tech. But they can't stop looking at big tech, you know? And until we started to get these numbers, that was born out by the ramp that we were seeing in those stocks.

LUKE KAWA: Yeah, I think it's certainly been the case. If you look to why these stocks have had a lot of success, it's just a great amount of earnings growth in excess of the broad market. And it's been an environment where this has been the waiting for Godot recession, right?

We've been calling for recession for the past 18 months and not really had those fears realized. If you think you're heading into an economic downturn-- and not one never happens-- well, you know, that means to us there's a lot more room to have a refresh of the business cycle, to have a lot more breadth in terms of where profit growth is coming from.

And I think that's-- you can start to see tentative signs of that in things like, you know, today, the new orders component of ISM manufacturing, it went above 50 for the first time in 16 months, suggesting that finally, we're going to see inventory restocking that build out a little more. That's more things you would associate with the industrial economy. That's more something you would associate with cyclical sectors doing well.

I think in the near term, we really do-- we'll be focused on these earnings. And as well, how the US, whether there is a policy response, what investors thoughts are on this little banking kerfuffle that seems to be happening in regional banks again in Q1, I feel like I'm having deja vu.