S&P 500 has gained nearly 11 per cent in 2023 so far. While the performance of the index is nothing short of a spectacular run, it has not been a broad based rally for the index stocks. A source of concern is that a major amount of the index’s 11% rise this year has been driven by massive advances in mega-cap tech stocks. An equal-weighted version of the S&P 500 is up around 1.5% year to date. Only a few large technology firms valued above $200 billion are driving those gains as they benefit from artificial intelligence buzz.
S&P 500 remains the top-most single indicator of large-cap US stocks representing companies across 11 sectors including Information Technology, Health Care and Communication Services totaling about 50 per cent of the index. The three major stocks are Microsoft, Apple and Amazon by index weightage while Facebook, Berkshire Hathaway, Visa are some other constituents.
On May 26, the broad-based index closed above 4,200 for the first time since August 2022, when the market began to fall and plummeted dramatically to last year’s low of around 3,577 in October.
Source: BlackRock Investment Institute
Will the S&P 500 bull run continue, only time will tell. The US Fed Chief’s post-FOMC meeting news conference on June 14 may reveal the likely actions of the central bank. A show of aggressiveness may spoil the party for the tech stocks especially the AI-driven sentiments.