How Long Can Mega-Cap Stocks Keep Fueling S&P 500 Rally?

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The coming months may naturally see the VIX move higher as uncertainty grows. However, one thing remains nearly certain: over the past decade, the tech sector has consistently driven stock market performance.

Since 2015, big tech companies have outperformed other stocks in the S&P 500 in terms of profits, with an average annual outperformance of 12.5%.Investors wonder whether the current tech boom will end badly. Goldman Sachs conducted a study comparing today's big tech companies with those of the dot-com bubble, and the findings suggest that today's tech giants are not as expensive when looking at metrics like the 2-year price-to-earnings ratio and enterprise value ratio.

This suggests that while there may be concerns about a tech bubble, the fundamentals of today's tech giants are stronger and more sustainable than those of the dot-com era. However, as with any investment, there are always risks to consider, and market dynamics can change.From a technical standpoint, one notable metric is the percentage of stocks trading above the 200-day moving average within the S&P 500 index.

 

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