Top Line
Stocks rallied on Friday as the S&P 500 posted its fifth straight week of gains, and as expected, the gains were led by big tech stocks, which have been behind much of the market’s strong run dating back to the end of 2022.
Stocks soared ahead of the holiday weekend.
Key Facts
The S&P 500 rose 0.7% on Friday, paring losses from Thursday’s surprise sell-off. The most widely cited U.S. stock index ended the unofficial final week of spring with a slight gain, finishing 0.3% below Tuesday’s all-time high.
The Nasdaq Composite Index, which rose 1% on Friday, hit a new all-time high on Tuesday, while the tech-light Dow Jones Industrial Average rose just 0.01%, about 2.3% (930 points) below its all-time high of more than 40,000 points last Friday.
Leading the stock market gains on Friday were the so-called “Magnificent Seven” big tech stocks: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
All stocks except Amazon rose by more than 0.7%, while the online retail giant’s shares only fell a relatively small 0.2%, helping the seven stocks add $182 billion to their combined market capitalization, led by Nvidia’s $65 billion increase.
Get Forbes breaking news text alerts: Start your text message alerts and stay on top of the biggest stories making headlines that day. Text “Alerts” to (201) 335-0739 or sign up now. here.
Amazing facts
The Magnificent Seven have a combined market capitalization of $14.4 trillion, making up 31% of the S&P’s market capitalization of $47 trillion, while the average market capitalization of the Magnificent Seven is $2.1 trillion, compared to an average market capitalization of $66 billion for the other 493 companies in the S&P.
Main Background
The stock market’s concentration at the top also applies to earnings, with the seven tech giants’ net income of $108 billion in the first quarter of 2024 accounting for a quarter of the S&P’s total profit of $426 billion. Investor confidence in the tech companies most likely to benefit from the artificial intelligence revolution — specifically semiconductor chip designer Nvidia — has bolstered the stock market in an otherwise unfavorable environment. Interest rates remain at 20-year highs recorded last summer, and market expectations about when rates will fall remain postponed, creating an obstacle for the stock market because higher interest rates typically reduce earnings.
References
