Google and Other Tech Stocks: Impact on the S&P 500 Surge
Investment in the tech sector will continue
Earlier in this series, we discussed the tech sector’s contribution to the rise of the S&P 500 (VOO) index this year. According to Reuters, more than 33% of the S&P 500’s gains this year have come from five tech players—Apple (AAPL), Google (GOOG), Facebook (FB), Amazon (AMZN), and Microsoft (MSFT).
Citing Daniel Morgan, senior portfolio manager at Synovus Trust Company, Reuters wrote that these tech players “are the dominant players in their specific spaces and the hottest areas in tech.” Cloud, AI (artificial intelligence), and ML (machine learning) are the “hottest areas” mentioned in the above statement that are expected to drive $2 trillion in spending during the next new computing cycle.
These tech players have been on an acquisition spree and are likely to continue to do so this year to further strengthen their presence in these areas.
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Earlier in this series, we discussed how the IT sector fell the most compared to peers in the S&P 500 index on June 9, which was the sector’s biggest fall since December 2016. The above chart by the Financial Times shows the fall in the S&P 500 on June 9 by points per company. However, since that fall, technology stocks have bounced back.
Oracle stock’s contribution to the S&P’s rise in 2017 to date
Citing AQR Capital Management, the Wall Street Journal reported that in an average year, the top ten stocks typically account for approximately 45% of the market’s overall price movement. The S&P 500 has also displayed a similar trend. The top ten stocks of the S&P 500 index, mostly comprised of tech players, have generated little more than half the overall advance in the index.