Stocktake: Market surge still driven by handful of tech giants
Half the stocks in the S&P 1500 remain at least 20 per cent below their own highs
Amazon and Apple are up over 70 and 50 per cent respectively in 2020, but many stocks are still struggling. Photograph: Kimihiro Hoshino/AFP via Getty Images
Tech stocks did something unusual last week – they fell. An index tracking the S&P 500’s technology sector fell three days in a row, the first such occurrence in 107 trading days. That’s the longest streak in history, according to LPL Research.
Mega-cap tech stocks have driven indices higher – Amazon and Apple are up over 70 and 50 per cent respectively in 2020, while Microsoft and Facebook have gained over 30 per cent – but many stocks are still struggling.
Although indices briefly hit all-time highs last week, half the stocks in the S&P 1500 remain at least 20 per cent below their own highs, notes Baird Investment’s Willie Delwiche. SentimenTrader’s Jason Goepfert points out that an equal-weighted version of the S&P 500, which gives the same weight to all stocks in the index as opposed to weighting them by market capitalisation, is still over 7 per cent below February’s highs.
This is a bull market, but it’s a very narrow one that remains dependent on a handful of tech giants.