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The S&P 500 notched an all-time closing high on Friday, yet most of its sectors were still trading below levels seen when the index reached its last peak a bit more than two years ago, according to DataTrek Research.
In a note emailed Monday, DataTrek evaluated the S&P 500’s sector gains over the roughly two years spanning to Jan. 19 — the day the index closed at a record peak — from its previous all-time high on Jan. 3, 2022.
“The rising tide to new highs has lifted very few boats, with only 3 groups up since the S&P’s last top in early 2022,” said Nicholas Colas, co-founder of DataTrek, in the note. Only energy, technology and industrials saw gains from the index’s old record high that year to its fresh peak notched Friday, the note shows.
While energy saw the biggest gains in that stretch at around 40%, “tech is the standout,” according to DataTrek.
Information technology is the S&P 500’s largest sector by far, with a weighting of about 30%, FactSet data show.
The energy sector’s jump from the S&P 500’s new peak on Friday from its old one in 2022 is “largely irrelevant to the index” considering its small weighting in it, currently at 3.7%, said Colas. “Energy was in the doldrums 2 years ago, so its gains are understandable.”
Big Tech’s performance
Nvidia Corp.
NVDA,
and Microsoft Corp.
MSFT,
— two megacap companies in the S&P 500’s tech sector — “made their own new highs on Friday,” according to DataTrek.
“It is no coincidence,” said Colas. “These two names are responsible for 1.1 percentage points of the S&P 500’s” 1.5% gain year to date, he wrote. “Without them, the index would not have made its record close on Friday.”
Nvidia and Microsoft are in the group of seven megacap stocks known as Big Tech, which collectively fueled the S&P 500’s gains in 2023. The group of giant companies, which spans across the index’s tech, communication-services and consumer-discretionary sectors, also includes Apple Inc.
AAPL,
Amazon.com Inc.
AMZN,
Google parent Alphabet Inc.
GOOG,
Facebook parent Meta Platforms Inc.
META,
and Tesla Inc.
TSLA,
While five of the seven Big Tech stocks saw gains during the S&P 500’s 0.9% rise from Jan. 3, 2022 through Friday, Amazon and Tesla were down over the same period, according to DataTrek.
DATATREK RESEARCH NOTE EMAILED JAN. 22, 2024
“In early 2022, no one could have guessed that ChatGPT would take the world by storm later that year, but it did, and we can thank this novel technology for nudging the S&P 500 to its fresh new high,” said Colas. “If you are bullish (as we are), then Friday’s breakout is a promising sign of things to come.”
The U.S. stock market was rising Monday afternoon, with the Dow Jones Industrial Average
DJIA
up 0.3%, the S&P 500
SPX
gaining 0.3% and the Nasdaq Composite
COMP
rising 0.4%, according to FactSet data, at last check. The S&P 500’s sectors were trading mixed, with gains led by industrials and tech in afternoon trading on Monday.
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