Shocking performances from some technology companies overshadowed an otherwise lackluster stock market. The S&P 500 broke its record for the 31st time this year on Tuesday, closing at 5,487.03 points, according to Bloomberg data. While the index is up more than 15% this year, that growth is by no means evenly distributed.
Looking at year-to-date data as of June 18, the stock prices of Nvidia, Microsoft, Apple, Meta, Google, Amazon, and Broadcom have surged an average of 25.3%, while the remaining 493 companies have only increased by 2.7%. Howard Silverblatt, senior index analyst at S&P, said that in June alone, the “Big Seven” (the list mentioned earlier, swapping Broadcom for Tesla) rose an average of 7.5%, But the rest of the index fell -0.5%. On Tuesday, Nvidia, Microsoft and Apple stocks accounted for half of the index’s total return, he added.
This unprecedented concentration makes some portfolio managers nervous. “They’re biting their nails. Because the bottom line is, if you’re not involved, you’re not going to get something back,” Silverblatt told wealth.
That’s because a version of the index that doesn’t distinguish between company market capitalization has grown just 4% this year. Additionally, the percentage of S&P 500 stocks trading above their 50-day moving average is declining, down from 92% in January to 47% on Monday, according to the data. Burundi.
The darling of tech darlings remains Nvidia, which this week briefly became the world’s most valuable company. As of Friday morning, its market capitalization was about $3.1 trillion, and its shares are up more than 170% so far this year. At the peak of Tuesday’s madness, it was worth more than the entire French or British stock markets, or the entire oil and gas industry. On that same day, one-third of the index’s returns came from this company alone. “That’s unheard of,” Silverblatt said. “The closest level of impact we can achieve [on the index] IBM was a company in the 1980s, when the new product PC was introduced.
So, how long can this growth last? Silverblatt said he wouldn’t bet money on Nvidia producing such returns every year. For him, it’s not a matter of if the chip monopoly is lost, but when. But ultimately, whoever ends up usurping Nvidia will likely become just another tech company in need of chips: “We can say it’s going to stay in the family.”
Looking more closely at IBM, in the early 1980s it topped the index and outperformed its competitors by a margin of two to one, according to IBM data. New York Times. By 1985, its share of the index was 6.4%, about the same as Apple is today. After Apple launched the Macintosh in 1984, the company began to lose its monopoly on personal computers. Its market capitalization is 5% of Apple’s.
Adam Kobisi, editor-in-chief of “Corbisi Letters” tells us wealth All waves of internet innovation “usually come with bubbles,” and he predicts there will be a correction period in which weaker players will be “flushed out.” Still, he predicts that big tech stocks will remain the market leaders and doesn’t expect anyone to displace Nvidia anytime soon.
So, in the short term, is this level of disproportionality a concern?
Well, just the top three stocks can significantly impact the market. Silverblatt added that “centralization is a dangerous situation” that makes “everyone nervous.” It fell about 4.5%. “The market is going to have to absorb that.”
