NEW YORK - Outsized stock price gains for Apple Inc and Microsoft Corp mean the two tech titans’ shares have attained unusual status: a combined weight of 10% of the benchmark S&P 500 index.
The last time a year ended with two stocks amounting to at least one-tenth of the S&P 500 was 1982, according to data from Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, when IBM and AT&T amounted to about 10.9% of the index. “A small number of names are fuelling a huge part of this rally,” said Matt Maley, chief market strategist at Miller Tabak, adding that such a “narrow market” is vulnerable to a 7% to 10% pullback.
“It’s just not sustainable,” said Tim Hayes, chief global investment strategist at Ned Davis Research. However, Goldman says, the current top five companies have lower growth expectations, lower valuations, and a greater re-investment ratio, which suggests “the current concentration may be more sustainable than it proved to be in 2000.”
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