The stock market’s rise this year has narrowed around a shortlist of big tech companies, a sign of possible weakness heading into 2022.
Five of the biggest stocks in the S&P 500 account for more than half of the broad benchmark’s gain since April, analysts at Goldman Sachs found. Of the S&P 500’s 24% advance this year, those stocks— Microsoft Corp . , Nvidia Corp . , Apple Inc., Alphabet Inc . and Tesla Inc . —are responsible for around one-third.
The dominance of a handful of tech behemoths marks a shift from the more inclusive brought-up that propelled the stock market late last year and in early 2021. Investors appeared to be returning to a favorite trade of the past decade focusing on a few large-growing profitable tech companies for safety. Analysts said, as they contend with a string of anxieties that have sapped confidence, that has the s&p 500 and the more than $5 trillion that follow it through passive funds on precarious footing heading into the new year several analysts and investors said. If those companies for whatever reason, stop performing, there’s nothing to support the market, said Peter Cikini, director of research at Hedge Fund Exotic Capital. Investors have been getting a dose of that reality in recent trading sessions. The s&p 500 fell nearly 2% During last week as shares of Microsoft Nvidia, Apple, Alphabet, and Tesla all slid at least 4.2%. This week, those five stocks continued to play a part in driving the index with all of them falling Monday before mounting a small recovery and then Tuesday’s 1.8% gain for the s&p 500.