Big Seven Face Test on How Far Rally Can Run

Investors have had a lot thrown at them this year: more Federal Reserve tightening, a regional banking crisis, geopolitical turmoil. And yet US stock indexes are on track for a stellar year.

The reason, time after time, has been simple: Big Tech.

Worried about a recession? The seven largest tech-related companies have impregnable balance sheets and generate piles of cash in good times and bad. A spat with China? Not to worry, the likes of Alphabet Inc. and Meta Platforms Inc. benefit from ad sales all around the world. Growth back in favor? Nvidia Corp. and Tesla Inc. have it covered, from AI to EV.

Those four, along with Inc., Apple Inc. and Microsoft Corp., have been dominant in 2023. Investors have ridden the cohort to a nearly 40% gain in the Nasdaq 100 and a 16% rally in the broader S&P 500, overloading portfolios to the extent that warnings are again sounding: If everyone’s fully invested in megacap tech, where will the next impetus for more gains come from?

S&P 500 Heavyweights