Wall Street News: U.S. stocks hit new highs again. The S&P 500 index has risen by 14% this year. Just five technology giants, Apple, NVIDIA, Microsoft, Google and Amazon, contributed to 60% of the increase.
U.S. stocks hit new highs again.
Driven by AI and large technology stocks, the S&P 500 index and the Nasdaq hit another record high on Monday. The key drivers are still those technology giants.
The S&P 500 Index has risen by 14% this year. Just five companies, Apple, Nvidia, Microsoft, Google and Amazon, contributed to 60% of the increase.
Nvidia alone contributed 34% of the S&P 500\’s rise.
The market value of these five giants already accounts for 25% of the market value of S&P 500 stocks.
One of the key reasons for the dazzling performance of the Big 5 is that their first-quarter earnings per share (EPS) increased by 84% year-on-year. While other S&P 500 stocks only increased by 5%.
In addition, strong performance over the past four quarters prompted Wall Street analysts to raise their 2024 EPS forecasts for these five technology stocks by 38%.
In comparison, the EPS forecasts for the other 495 stocks in the index were revised down by 5%.
In the past two years, the performance gap between the S&P 500 market capitalization-weighted index and the S&P 500 equal-weighted index has become wider and wider. The former has made rapid progress, while the latter has almost stood still.
Market breadth performance is extremely poor. Morgan Stanley said that the proportion of stocks that outperformed the S&P 500 in the past month reached an all-time low.
In the S&P 500 market cap-weighted index, the six technology stocks with a market value of more than $1 trillion rose by an average of about 11.5% in the second quarter. The remaining 490-plus stocks in the index fell by an average of about 3% in the second quarter.
How long will this Matthew Effect in U.S. stocks last? In particular, what drives technology giants to continuously reach new highs is mainly the high valuation given to them by investors, not just their performance. Will bubbles appear? It has also become the next thing investors need to consider.
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60% of the U.S. stock market’s gains this year came from 5 stocks
Wall Street News: U.S. stocks hit new highs again. The S&P 500 index has risen by 14% this year. Just five technology giants, Apple, NVIDIA, Microsoft, Google and Amazon, contributed to 60% of the increase.
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