The S&P 500 (^GSPC) is back near all-time highs.
The recent rally in tech stocks, including a nearly 30% surge in Nvidia (NVDA) shares, has helped the index rise more than 7% from its bottom on August 5.
During that time, the “Magnificent Seven” tech stocks — Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) — have added more than $1.4 trillion in market cap, nearly half of the $3.2 trillion increase in the S&P 500’s market cap since August 5.
After a steep decline in July, the recent surge has brought the Nasdaq Composite Index (^IXIC) out of a correction in 11 days, its shortest correction since October 2011.
Ed Clissold, chief U.S. strategist at Ned Davis Research, recently told Yahoo Finance that given that tech stocks led the losses in the latest sell-off, “it makes sense to see stocks recover.”
And now, some of the biggest companies in the space are sitting tight near their 52-week highs ahead of Nvidia’s big earnings report on Aug. 28.
During the second-quarter earnings season, some of Nvidia’s AI-powered rivals reported mixed results that struggled to meet Wall Street expectations.
“This is the ninth consecutive day that the S&P has been up,” Dan Niles, founder of Niles Investment Management, told Yahoo Finance on Tuesday. “It’s the longest winning streak since 2004. I wouldn’t necessarily chalk this up to Nvidia’s performance.”
“But if you think about this over a few years and don’t worry about what’s going to happen the next day, I think you should be in pretty good shape.”
Signage is displayed at an Nvidia office building in Santa Clara, California, on Wednesday, Aug. 7, 2024. (Associated Press/Jeff Chiu) (Associated Press)
While AI trading is once again driving the market’s recent rally, there have also been some promising developments happening below the surface.
The S&P 500 Equal Weighted Index (^SPXEW), which is less impacted by the movements of big tech companies than the market cap weighted S&P, has hit new highs, with sectors such as Utilities (XLU), Consumer Staples (XLP) and Healthcare (XLV) currently at 52-week highs and Financials (XLF) currently at record levels.
“From our perspective, this is a very healthy rally,” Abby Yoder, U.S. equity strategist at JPMorgan, told Yahoo Finance. “It’s so broad, it’s the broadest we’ve seen since last summer, in terms of participation across a range of sectors, a range of stocks.”
Still, the S&P 500 is up nearly 18% this year, beating the nearly 9% rise of the equally-weighted index this year.
“The reality is in a bull market, typically all sectors rise,” said Kevin Gordon, senior investment strategist at Charles Schwab.
The story continues
In July, Schwab’s Gordon and his team pointed out in a Yahoo Finance chartbook that the number of S&P 500 companies outperforming the index for two consecutive months had fallen to an all-time low.
Since then, that view has completely reversed: As of Monday’s close, about 58% of S&P 500 constituents were outperforming the index, the largest margin of outperformance since November 2022, when the current bull market began.
“Trends are much more important,” Gordon said. “Across all these indicators, things look relatively healthy.”
Recent economic data indicates that the U.S. economy is still growing, albeit slowing, and market movements in recent weeks are consistent with the expansionary trade policies with a soft landing that trade strategists have been discussing since the beginning of 2024.
And while technology is still likely to contribute to the upside, JPMorgan’s Yoder said there may be more room for rotation into other areas because “the growth backdrop looks healthy and we’re getting on board with Fed policy.” [interest rate] The same goes for cutting cycles.”
Josh Shaffer is a reporter for Yahoo Finance. Follow him on X Follow.
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