The S&P 500’s Year Led by the S&P 7

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The image displays a financial graph illustrating the performance of big tech stocks versus the S&P 500 index during 2023. It highlights that big tech stocks have surged by 75% for the year and now comprise roughly 30% of the S&P 500's value. The graph contrasts the cumulative returns of a group dubbed 'Magnificent Seven', the overall S&P 500 index, and the collective performance of 493 companies within the S&P 500. The 'Magnificent Seven' show a dominant upward trajectory, outstripping both the general index and the aggregated return of the 493 other companies, with the time frame spanning from January to December of 2023.

WSJ shows how Apple, Microsoft, Alphabet, Nvidia, Tesla, Amazon and Tesla jumped 23% in 2023, twice the index’s rally as a whole.

The Magnificent Seven stocks have swelled to represent about 30% of the S&P 500’s market value, according to Goldman Sachs Global Investment Research. That is approaching the highest-ever share for any seven stocks.

“It’s a mind-blowing number to me when I think about an index that’s supposed to represent such a broad group of companies,” said Ann Miletti, head of active equity at Allspring Global Investments, of the wide outperformance gap.

There is some nuance, four of the seven trade below where they were at in 2021, but the earnings gap is larger and the total valuation exceeds the entire stock market of other western countries.

Read more at WSJ


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