A small group of tech stocks is driving the market rally — why that's 'not a flaw'

  • 📰 YahooFinanceCA
  • ⏱ Reading Time:
  • 68 sec. here
  • 6 min. at publisher
  • 📊 Quality Score:
  • News: 40%
  • Publisher: 63%

Mike Wilson News

Stock Market,Goldman Sachs,Tech Companies

Wall Street strategists are arguing the stock market rally's next leg higher doesn't need broader participation.

While it might seem concerning to have too much riding on a handful of stocks, strategists say the trend may not be a bad thing for markets.

Wilson found roughly 20% of the top 500 stocks are outperforming the broader index over a rolling one-month period. This is the lowest percentage of companies outperforming in Wilson's dataset dating back to 1965. Wilson argued that when considering the impact of high interest rates on corporations, this makes sense. Investors have flooded large-market-cap stocks that have held up well in the higher rate environment and are seeing earnings grow more than their smaller peers.reflect similar sentiment. Three Wall Street firms cited tech outperformance as part of the reason the index is doing better than they initially thought this year.

"We underappreciated the degree to which those earnings would lift those few stocks and the degree to which those few stocks would drive the rest of the market, and that's basically what we're adjusting for," Goldman Sachs equity strategist Ben Snider told Yahoo Finance. "The beauty of the S&P 500 index ownership in general, which is when a few companies perform really well, they can drag up the whole index," Snider said. "And we're seeing that right now. So I think most investors who own the S&P 500 are very happy with what's happened, even if it means their underlying portfolios are more concentrated," Snider said.

 

Thank you for your comment. Your comment will be published after being reviewed.
Please try again later.
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:

 /  🏆 47. in BUSİNESS

Business Business Latest News, Business Business Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Stock market today: Wall Street mixed as red-hot chipmaker Nvidia claws back some recent lossesMarkets on Wall Street were quietly mixed early Tuesday following a mixed session a day earlier that saw a third straight decline for red-hot chipmaker...
Source: YahooFinanceCA - 🏆 47. / 63 Read more »

Stock market today: Wall Street drifts in early trading as Nvidia slips more moreNEW YORK (AP) — U.S. stock indexes are drifting in mixed trading as Nvidia regresses a bit more. The S&P 500 was flat in the early going Monday, still near its record set last week.
Source: SooToday - 🏆 8. / 85 Read more »