The S&P 500 is back at record levels for the first time in two years. Information technology is the only one of the index’s 11 sectors that can say the same. Home to the likes of Microsoft, Apple and Nvidia, the tech sector is riding the mania over artificial intelligence and has propelled the broader market to a record close in five of the last six trading sessions.
The S&P 500 is up 2.5% to start 2024, while the tech segment has risen 5.9%. The 10 other sectors are trading an average of 15% below their all-time highs, and none has set a new record in January. The equal-weighted S&P 500, which gives the same status to the smallest and largest companies in the index, is down 0.3% this year.
The market’s rally was much wider two years ago. Seven other sectors—industrials, financials, consumer staples, real estate, healthcare, utilities and materials—joined tech to trade at new highs in the two weeks preceding the S&P 500’s January 2022 record. A narrow rally is a potentially worrying sign to some investors and strategists.
When just a handful of big stocks are responsible for most of the market’s gains, it becomes more vulnerable to a downturn if a few of those heavyweights stumble, they say. For example, if six of the biggest tech stocks were to pull back to their 200-day moving averages, it would knock about 5% off the S&P 500, according to an analysis from Bespoke Investment Group. (The 200-day moving average is a widely watched technical indicator used to gauge longer-term price trends.) Big Tech dominated the market for most of last year, too.
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