{The Fantastic 7} The Companies Doing the Heavy Lifting in the US Stock Rally

Tech Titans continue to lead the surge, potentially exposing the other sectors. Sponsored [This Could Become Your Favorite Stock In A Recession]( Financial experts are split on the recession. Some deny, some say it’s already started, and some are giving new silly names like a “rolling recession” to try to make sense of it. The fact is much of the market believes a big recession is still coming...[Get the FULL Report Here]( By clicking link you are subscribing to The Investor Newsletter Daily Newsletter and may receive up to 2 additional free bonus subscriptions. Unsubscribing is easy. [Privacy Policy/Disclosures](  Get to Know the 7 Companies Powering the US Stock Market [Image]  Hello Stock Traders,  2023 has turned out to be a year of delightful paradoxes. Predictions at the outset pointed towards a bear market brought on by the sting of 2022's interest rate hikes.  However, the American economy, resilient as ever, didn't just weather the storm, but boldly strode ahead.  With a smattering of regional bank failures and increasing interest rates acting as mere speed bumps, the S&P 500 index managed to leap up by over 14% this year.  With a couple of weeks to spare, the index's performance could turn out to be one of the best in the last two decades.  But here's the rub. This seeming rally is underpinned by an imbalance that threatens the market's stability.  A handful of tech giants - the kings of the market - are responsible for much of the growth, while the rest of the companies in the index are left twiddling their thumbs.  Remi Olu-Pitan of Schroders cautions against this lopsided growth, alluding to the echoes of the infamous tech bubble of the 90s and early 2000s.  This isn't the first time the market's leaning heavily on a small group of companies. Frédéric Leroux of Carmignac compares today's tech dominance with the oil companies of yesteryears or the 'Nifty 50' of the 1960s.  What's alarming, though, is the current level of concentration that has reached dizzying heights, cloaking the mediocre performance of the majority of stocks and complicating investment decisions.  Consider this: seven tech leviathans - Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta - have seen their value surge anywhere from 40% to 180% this year.  The remaining 493 companies? They've barely made a dent.  Nvidia, riding high on the AI boom, added a staggering $640bn to its market cap this year, a sum almost equal to the combined value of JPMorgan and Bank of America.  Does this imbalance pose a problem?  It indeed paints a distorted picture of the market's health, with a handful of mega-caps stealing the limelight while the rest of the market fades into the background. The OECD warns that the colossal scale of these companies and the rise of passive investing could make the market prone to synchronous price movements, intensifying both market rises and falls.  It could also potentially stifle the growth of smaller businesses.  Despite these concerns, there's a silver lining. Some experts believe that the market can either lift itself by its bootstraps and narrow the gap with the leaders, or the leaders might experience a pullback.  This state of affairs has sparked one of the most spirited debates in recent financial history.  This stock market phenomenon is not unlike a favorite band going mainstream - their popularity and value skyrocket, overshadowing the rest.  The current tech dominance is such that five of these seven companies account for nearly a quarter of the entire S&P 500's market cap.  To put things into perspective, Apple's worth surpasses that of the UK's top 100 listed companies combined!  AI boom has been a key player in this concentration trend, but it's part of a broader narrative. The US's tech ascendency has given birth to a slew of robust, profitable companies, attracting investors like moths to a flame.  Even Warren Buffett, the epitome of value investing, hasn't shied away from tech stocks like Apple.  Other trends like passive investing and ESG investing have further intensified this concentration, augmenting the influence of these leading stocks in the index and steering investment capital into tech.  But is that good or bad to the overall market’s scheme of things? Only time will tell. Trade safe!  -James  Coming Up Next: The Fed just showed their dual personality on yesterday's meeting. Want to know more? Find out in the article below!   SPONSORED 🔽 Sponsored [How To Extract Profits From Uncertain Markets]( The news wants to scream “doom and gloom” about the current market. Conditions feel uncertain – that’s the prevailing sentiment. But guess what? There’s NEVER any real certainty in the market. Reveal how you can take advantage of this current market.[The #1 Strategy For Uncertain Market Conditions]( By clicking link you are subscribing to The Investing Ideas Daily Newsletter and may receive up to 2 additional free bonus subscriptions. Unsubscribing is easy. [Privacy Policy/Disclosures]( Decoding the Fed's Mixed Signals: How the Stock Market Stayed Steady If there was ever a time to remind yourself that investing is not a sprint, but a marathon, it was Wednesday's market close. To say that the day was a whirlwind of ups and downs would be a classic understatement.  Investors found themselves in the midst of a high-stakes game of hide and seek with the Federal Reserve - a game that felt less like Wall Street and more like a Stephen King novel.  Jim Smigiel, chief investment officer at SEI, was bang on when he likened the Fed's decision to keep rates on hold to a "Jekyll and Hyde meeting."  It's a tad paradoxical for the Fed to hit the pause button after a rapid-fire series of hikes since March 2022 while simultaneously leaving room for two more hikes this year. Talk about mixed signals!  As anticipated, the Fed maintained the fed-funds rate at 5% to 5.25%, a refreshing breather after a torrent of hikes from near zero.  Instead of hinting at another 25 basis point increase, the Fed's so-called dot plot suggests another 50 basis points of tightening on the horizon.  This unexpected curveball sent stocks on a steep slide and ignited a surge in Treasury yields, especially the policy sensitive 2-year note. It's a seesaw world in the financial market, after all.  Just as the bears were starting to break into a happy dance, Fed Chair Jerome Powell stole their thunder.  He stepped up to the podium and refused to commit to a July rate increase, instead emphasizing that no decisions had been made and that next month's gathering could be an exciting affair - what he charmingly referred to as a "live meeting." Well, that certainly got the market buzzing!  Powell also debunked rumors that the Fed might soon transition to cutting rates. Not so fast, he said.  A cut will only be on the table once inflation is significantly reduced, which could be a couple of years away. Talk about playing hard to get!  Gregory Daco, chief economist at EY, termed this spectacle as a manifestation of "cognitive dissonance" at the Fed.  There's a consensus to raise the federal-funds rate by an additional 50 basis points, yet the rate remains unchanged in June. While Powell insists that the Fed is merely easing off the accelerator rather than taking a pit stop, market observers like Daco beg to differ.  He even suspects a July hike is on the cards, reading into Powell's Freudian slip - referring to Wednesday’s policy decision as “the skip.”  As the day drew to a close, the S&P 500 barely budged from its pre-Fed statement position, notching up 0.1% to end at 4,372.59, its highest close since April 21, 2022.  Meanwhile, the Dow Jones Industrial Average took a tumble, courtesy of a 6.4% drop by UnitedHealth Group Inc., while the Nasdaq Composite edged up by 0.4%.  Fast-forward to Thursday morning, and stocks were back in the green with the Dow up 177 points, the S&P 500 up 0.4%, and the Nasdaq nudging up by 0.2%.  As Smigiel wittily put it, there's a distinct "glass-half-full feeling in equity markets at the moment."  But whether this rally sustains or fades as we delve deeper into the year, only time will tell. One thing is clear, though - the markets aren’t for the faint of heart.  Disclaimer:  The material in this document is for informational purposes based on our proprietary research. It is not an offering, specific recommendation, or a solicitation of an offer to buy or sell any securities mentioned or discussed herein.  Any performance results discussed herein represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.  Due to the timing of information presented, any investment performance reflected within this document may be adjusted after the publication and distribution of this material. 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