NEW YORK: Investors are once again crowding into a narrow range of technology and internet stocks, heightening concerns that the market's dramatic bounce from last month's lows is becoming increasingly vulnerable to sharp reversals as the coronavirus outbreak continues to batter the economy.
But a top-heavy market is also a worrisome sign to some investors - especially as concerns grow that the S&P's 26per cent rally from its March lows have put it far ahead of economic fundamentals at a time when the United States continues to shed jobs at a record pace and corporate earnings are deteriorating.
Netflix shares have climbed 35per cent so far in 2020, Amazon has risen nearly 30per cent, while Microsoft is up 11per cent. "You have a market that was narrow back in February and too concentrated in technology. Now it's even more so," said Matt Maley, chief market strategist at Miller Tabak. The appeal of tech and other internet companies makes sense to some investors, especially with an uncertain market and economic outlook.