The U.S. stock market is nearly the most concentrated it has ever been – the only exception being the late 1920s (gulp) – with the top five companies alone (Alphabet, Amazon, Apple, Microsoft, and Nvidia) comprising nearly 25% of the market cap of the S&P 500.
Merryn Webb for Bloomberg News:
Add in the next two to make up the Mag 7 [Meta and Tesla] and the market cap of these is larger than all the stock markets in the world bar the US. The Mag 7 are bigger than the entire Chinese market, double the size of the Japanese market and over four times the size of the UK market (ouch…).
Look at profits and it isn’t quite so shocking — but it is still shocking. Between them, the Mag 7 make around $361 billion a year… That’s much the same as all the companies in Japan and very significantly more than all the listed companies in the UK put together ($217 billion). Apple alone makes more in a year than all the listed companies in South Korea and very much more than those in Italy. In terms of size and profits these seven companies are, says [Deutsche Bank macro strategist Jim] Reid, more like countries than companies…
Historically, markets have been more concentrated in periods of lower yields and less in periods of higher yields. The Mag 7 have weathered rising yields very well – but that may be partly because of the constant expectation that they will fast fall again.
But what if they don’t? As Brian Pellegrini of Intertemporal Economics points out, leading indicators of inflation are “flashing warning signs” across the board at the moment. Do not rule out a 2024 that rhymes more with 1972 than most people currently expect. A second wave of inflation would really test the “this time is different” argument. For context, note that the Nifty Fifty stocks fell 19% in 1973 and another 26% in 1974. Not because they were bad companies, but because they were expensive companies…
MacDailyNews Take: The foreboding is strong with this one.
Please help support MacDailyNews. Click or tap here to support our independent tech blog. Thank you!
Support MacDailyNews at no extra cost to you by using this link to shop at Amazon.
The post Apple and the rest of ‘The Magnificent Seven’ dominate the S&P 500 appeared first on MacDailyNews.
