Tech Stock Rally Continues? 'Not Sure'... Big Tech Weight in S&P 500 Hits Lowest Since 2020

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] This year, as tech stocks have been plummeting day after day, the proportion of Big Tech in the S&P 500 index is decreasing. Last week, tech stocks rebounded in the New York Stock Exchange, surprising the market, but there are concerns that this movement will be difficult to sustain.

On the 13th (local time), Bloomberg reported that the combined weight of five representative Big Tech companies?Apple, Microsoft (MS), Amazon, Alphabet, and Meta Platforms?in the S&P 500 index has dropped from 24% in September 2020 to 19% currently. These five companies have lost more than $3 trillion (approximately 4,000 trillion KRW) in market capitalization this year due to deteriorating earnings and interest rate hikes.

Bloomberg also reported that the gap left by the decline in tech stocks has been filled by traditional companies such as energy firms like ExxonMobil, which benefit from high oil prices and interest rate hikes, and banks including Wells Fargo.

Tech stocks showed a significant rise of over 9% on the 10th and 11th, driven by expectations of a slowdown in the Federal Reserve's pace due to easing inflation. This was the largest two-day gain since the 2008 global financial crisis. The Nasdaq index surged more than 8% over the week.

However, the market views this movement as unlikely to continue. Tech stocks have been falling sharply this year, and as Big Tech companies announce worsening earnings and take measures such as mass layoffs to improve profitability, it is difficult to expect immediate improvement in their situations. Despite the recent rebound in tech stocks, the Nasdaq index has fallen 28% this year.

Julien Stauffer, founder of hedge fund firm Stauffer Capital, told the Wall Street Journal (WSJ), "This is a typical pattern in a major bear market," adding, "This (downtrend) is not over." Bank of America (BoA) also forecasted that Big Tech companies will likely experience poor earnings for years to come due to cost pressures.

This content was produced with the assistance of AI translation services.