{"id":9705,"date":"2023-05-16T23:31:03","date_gmt":"2023-05-17T03:31:03","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/apple-stock-has-lifted-the-sp-500-the-rest-of-the-market-is-ready-to-rise\/"},"modified":"2023-05-16T23:31:04","modified_gmt":"2023-05-17T03:31:04","slug":"apple-stock-has-lifted-the-sp-500-the-rest-of-the-market-is-ready-to-rise","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=9705","title":{"rendered":"Apple Stock Has Lifted the S&P 500. The Rest of the Market Is Ready to Rise."},"content":{"rendered":"
\n
<\/p>\n
<\/p>\n<\/figure><\/div>\n

Big Tech has rescued the
\n S&P 500
\n this year, while most other stocks have faltered. That may mean that opportunity exists outside of tech stocks, though certain risks should keep investors cautious.\u00a0<\/p>\n

The S&P 500\u2019s gain of almost 8% so far this year is because Big Tech names such as
\n Apple
\n (ticker: AAPL) and
\n Microsoft
\n (MSFT), for example, have gained more than 30% each this year. Their combined market values are just over $5 trillion, almost 15% of the S&P 500\u2019s aggregate market value. The index\u2019s level is weighted by market value, so the share-price movements of these highly valued companies have a heavy influence on the index\u2019s movement.\u00a0<\/p>\n

\n

The two main drivers behind Big Tech\u2019s gain are lower bond yields and better-than-expected earnings. Sales and earnings are benefiting from artificial intelligence, which is driving product enhancements. Lower yields on long-dated bonds make future cash profits more valuable\u2014and these growing companies are still valued on the basis that a bulk of their profits will come many years in the future.\u00a0<\/p>\n

Meanwhile, the rest of the market has performed rather poorly. The
\n Invesco S&P 500 Equal Weight
\n exchange-traded fund (RSP) is about flat for the year. This ETF weights each stock in the index equally, stripping out the outsize effect of Big Tech and showing the movement of the average stock. It has underperformed the standard market value-weighed S&P 500 since the end of 2022\u2014and the degree of underperformance has been almost as stark as it has been in any stretch in the last couple of years, according to Morgan Stanley.<\/p>\n

The difference is that most stocks outside of technology have been dented by a an expected reduction in economic demand. The market is jittery about the delayed impact of the Federal Reserve\u2019s short-term interest-rate increases. Plus, recent banking problems look set to further crimp lending and spending. \u00a0<\/p>\n

There\u2019s good news in all of this for those who are interested in non-tech names. The equal-weighted S&P 500 ETF\u2019s underperformance won\u2019t likely get much worse from here, considering recent trends. After all, the ETF is at a price level relative to the conventional S&P 500 that\u2019s about as low as it\u2019s been in the past couple of years.<\/p>\n

So if the market rises, most non-tech stocks could outperform Big Tech\u2014and the conventional S&P 500. If both the market and tech fall, maybe the average stock can hold its ground better. That\u2019s especially true if the deterioration to economic growth is almost over. Already, gross domestic product growth and the rate of inflation have both declined some. Investors worry there\u2019s more destruction on the way, but if the economy stabilizes by, say, the end of this year, the majority of stocks could start to see substantial gains, especially if the Fed stop hiking rates.\u00a0<\/p>\n

These are important themes to monitor for those who are gun-shy about buying Big Tech stocks after their incredible run upward.\u00a0<\/p>\n

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Big Tech has rescued the S&P 500 this year, while most other stocks have faltered. That may mean that opportunity exists outside of tech stocks, though certain risks should keep investors cautious.\u00a0 The S&P 500\u2019s gain of almost 8% so far this year is because Big Tech names such as Apple (ticker: AAPL) and Microsoft […]<\/p>\n","protected":false},"author":1,"featured_media":9706,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-9705","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nApple Stock Has Lifted the S&P 500. The Rest of the Market Is Ready to Rise. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Big Tech has rescued the S&P 500 this year, while most other stocks have faltered. 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