Investors were given plenty of opportunities to fret about the outlook for technology giants this earnings season. Instead, they doubled down on a strategy that has worked all year: piling into the biggest stocks.
That buying spree has fueled an abrupt U-turn in the Nasdaq 100 Stock Index that went from correction territory to a 15-month high in a matter of three weeks, adding roughly $2 trillion in market value along the way.
With optimism running high that a recession will be avoided, market professionals are looking to tech behemoths like Microsoft Corp. and Apple Inc. to lead the market higher in the final six weeks of the year despite stretched valuations.
“There continues to be a divergence between the magnificent 7 and the rest of the market,” said Jason Benowitz, senior portfolio manager at CI Roosevelt. “There’s definitely a question as to whether or not there will be a catch up and how it would occur. As to what the trigger for that might be, I’m not concerned about that happening in the near term.”