COTW: Unstoppable Tech

May 23, 2023COTW: Unstoppable Tech

  • Markets have been performing relatively well this year. Overall, the S&P 500 is up 9.9% year-to-date. However, this perceived market strength is not indicative of the average public company’s performance. Instead, a handful of stocks—Meta, Apple, Microsoft, Amazon, Nvidia and Alphabet—have been driving market strength.
  • These six companies, collectively known as Mega Cap Tech, now represent a combined 24% of the S&P 500. Microsoft and Apple alone account for nearly half of this year’s gains, and together, the two companies make up 14.1% of the S&P 500. Apple’s weighting, at 7.4% of the S&P 500, is the largest for any single company since at least 1980. Collectively, Mega Cap Tech has experienced a 59.7% year-to-date increase.
  • In contrast, small and micro-cap stocks have been battered by the uncertainty surrounding the ongoing banking sector turmoil and the future of the Fed’s monetary policy. Debt dynamics, higher borrowing costs expected for an extended period, and the potential for a looming credit crunch put additional pressure on smaller companies, which is reflected in their performance. U.S. small-cap stocks have only increased by 1.3% year-to-date, while U.S. micro-cap stocks have declined by 2.5% this year.


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