Chart of the week

2023 has seen an extraordinarily concentrated rally

Stocks have rallied in 2023. But this week’s chart looks at the massive divide between returns on the Big 6 tech stocks and the rest of the S&P 500.

May 5, 2023 | 2 minute read

“Big 6” tech stocks vs. the broader S&P

Source: Bloomberg Finance, L.P. as of May 2, 2023. Big 6 tech stocks refer to a market-cap weighted index of Apple, Amazon, Microsoft, Nvidia, Tesla and Alphabet. Past performance is no guarantee of future results.

  • U.S. stocks are up more than 7% year to date, largely defying a challenging macro backdrop, as markets have digested three 25 basis point Fed rate hikes (in addition to the 425 basis points the Fed hiked last year), negative earnings growth, softening economic data and a (mini?) banking crisis.1
  • Under the hood of this year’s rally, though, it becomes a bit less impressive as it has been extremely concentrated, almost exclusively driven by the largest growth-oriented technology stocks.
  • As the chart shows, a market-weighted index of the largest six technology stocks has returned 38% year to date, or about 5x the return of the broader S&P 500.1
  • The rally in big technology stocks has pushed the weighting of the top 10 stocks in the S&P 500 to nearly 30% of the Index, close to the highest on record. In fact, the S&P 500 would have been nearly flat year to date absent the outsized gains of these large stocks.
  • Despite the strong headline returns in 2023, the chart highlights the challenging investment environment that remains in place for the majority of stocks, including the need for flexibility and the importance of alternative sources of growth.

  • Bloomberg Finance, L.P. as of May 3, 2023. Big 6 tech stocks refer to a market-cap weighted index of Apple, Amazon, Microsoft, Nvidia, Tesla and Alphabet. Past performance is no guarantee of future results.

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