US Tech Stocks Market Cap Soars to 2,704 Trillion Won Amid Banking Crisis

In the first quarter of this year, the market capitalization of leading technology stocks, which were at the center of the US stock market's rise, increased by approximately $2.05 trillion (about 2,704 trillion KRW).

Major foreign media reported on the 8th (local time) that the sharp rise in the stock prices of the top 20 US big tech companies, including Apple and Microsoft (MS), led the overall increase in the S&P 500 index in the first quarter.

While the market capitalization of US S&P 500 companies increased by about $2.36 trillion in the first quarter, approximately 90% (about $2.05 trillion) of this growth came from the top 20 big tech companies.

This was the result of the stock price rally of big tech continuing as the possibility of a tightening shift, highlighted by the collapse of Silicon Valley Bank (SVB), led to increased expectations for growth stocks.

Among S&P 500 companies, the semiconductor company Nvidia had the largest stock price increase, rising 83% in the first quarter alone. During this period, the world's largest social media company Meta and enterprise software company Salesforce saw their stock prices rise 76% and 42%, respectively, continuing the rally.

Apple's stock price increased by 25%, but due to its status as the world's largest market cap company, its increase amounted to $600 billion, the largest among them.

According to private equity firm Apollo Global Management, the market capitalization of stocks other than the top 20 tech stocks within the S&P 500 index increased by only 7% this year, adding $320 billion.

[Image source=Reuters Yonhap News]

In the market, the banking crisis triggered by the SVB collapse had raised expectations that the US Federal Reserve (Fed) would soon shift to cutting interest rates. This was because the inflation rate, which peaked at 9%, turned downward and recently dropped to 6%, and fears of worsening bank insolvency, including the SVB collapse, highlighted concerns about a deepening recession.

However, with oil prices surging due to surprise production cuts announced by oil-producing countries and forecasts that this could negatively impact price stability, uncertainty has increased over whether the Fed will continue its rate hike path or switch to a rate freeze.

According to the Chicago Mercantile Exchange (CME) FedWatch, a model predicting the Fed's benchmark interest rate, the probability of a 0.25 percentage point rate hike at the May Federal Open Market Committee (FOMC) meeting has risen to 57.2%.

Meanwhile, concerns about high inflation lowering the possibility of a return to the pre-2021 interest rate environment have led to forecasts that the recent big tech stock rally may soon disappear.

Bank of America pointed out that in the last week of last month (27th?31st), investors heavily sold technology stocks, turning tech stocks into net sellers for the first time in six weeks, indicating that the big tech stock rally has already begun to end.

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