In what may not be a surprise to those who have been tracking large tech stocks in the American market, the national exchange’s top pioneers in consumer technology are dominating recent gains after a significant market crash that has left the indices in the doldrums.
Reporting today shows that a full 20% of the S&P 500’s market capitalization is made up of the tech ‘big five,’ although that list differs slightly from the often used moniker FAANG group (Facebook, Amazon, Apple, Netflix and Google) – the biggest movers, according to analysts, have been Apple, Amazon, Facebook and Google, as well as Microsoft, a firm that is commonly left out of the headlines even though it’s got the largest market cap of all and a history of near monopoly on computer operating systems. Also, for its part, Netflix stock has risen greatly over the last few months and still seems buoyant despite the recent bloodbath on Wall Street.
As for index behavior, the S&P 500 is oscillating around a mediocre middle of $2,700 and change, while the Dow Jones industrial average experiences similar listlessness.
Even those S&P numbers, according to some analysts, are too optimistic when compared to actual economic gains and the reality for working Americans.
“A top-heavy market is also a worrisome sign to some investors – especially as concerns grow that the S&P’s 26% 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,” writes Lewis Krauskopf at Reuters, on current stock climates. “The index’s narrow leadership may also be an indication that investors are skeptical that other areas of the market will fare well in coming months. At the same time, a turn lower in stocks could cause investors to bail out of winning shares to lock in their gains, leading to even steeper declines.”
If, as some analysts say, investors are concentrated in this narrow band of tech stocks, that’s not going to be nearly enough to raise all boats or make up for considerable losses elsewhere, for instance, in oil and gas, where negative crude oil prices are going to decimate a major part of the American blue-chip community. Keep this in mind as you venture into any part of the American stock market today.