Nvidia is carrying the S&P 500 like no company since possibly IBM 4 decades ago
What caused the S&P 500 Index to break its 31st record this year?
The S&P 500 Index broke its 31st record this year due to the astounding performance of a few tech companies, such as Nvidia, Microsoft, Apple, Meta, Google, Amazon, and Broadcom. These companies have on average soared by 25.3%, while the remaining 493 companies have grown by only 2.7%.
How significant is Nvidia's impact on the S&P 500's total returns?
Nvidia's impact on the S&P 500's total returns is substantial, with its shares accounting for 34% of the index's ascent so far this year, according to UBS. On Tuesday, Nvidia, Microsoft, and Apple stock equated to half of the index's total returns1. This unprecedented level of concentration has left some portfolio managers nervous, as the market's overall performance heavily relies on the success of these tech giants.
Why are portfolio managers nervous about the current market situation?
Portfolio managers are nervous about the current market situation due to the unprecedented concentration of growth in a few tech companies like Nvidia, Microsoft, and Apple. These "Magnificent Seven" are driving the S&P 500 Index, while the remaining 493 companies have grown by just 2.7%. This disproportionality increases risk and makes market fluctuations more impactful.