S&P 500 Record Highs Driven by Four Stocks
The S&P 500 index has reached record highs, with just four stocks accounting for nearly half of its gains in February, as per BofA Global Research.
Equity Market Performance
In a research note dated March 2, BofA equity and quantitative strategists highlighted that U.S. equities outperformed other asset classes last month, although the breadth was narrow.
Major Contributors to Growth
Megacap tech companies such as Nvidia Corp., Meta Platforms Inc., Amazon.com Inc., and Microsoft Corp. were responsible for contributing 45% of the S&P 500’s total return of 5.3% in February.
Sector Performance
Despite the dominance of these tech giants, all sectors within the index experienced positive growth in February. Cyclicals like consumer discretionary, industrials, and materials led the way in this uptrend.
Market Sentiment
Despite hitting new highs, market sentiment remains cautious rather than euphoric, according to the BofA strategists.
Fresh All-Time Peak
The S&P 500 closed at 5,137.08 on Friday, marking the index’s 15th record close of the year so far, according to Dow Jones Market Data.
Sector Analysis
While technology and communication-services sectors outperformed in February, they fell down the pecking order compared to January. The tech sector saw a total return of 6.3%, while communication services gained 5.7%.
Big Tech Dominance
Big Tech giants like Nvidia, Meta Platforms, Amazon, Microsoft, Apple, Google’s Alphabet, and Tesla play a significant role across tech, communication-services, and consumer-discretionary sectors within the S&P 500 index.
Nvidia Stock Surges Amidst AI Optimism
Shares of chip maker Nvidia, with a market value of $2 trillion, experienced a significant surge in February as the company continued to ride the wave of optimism surrounding artificial intelligence.
Stock Performance and Market Contributions
Nvidia’s stock was trading 5.1% higher on Monday afternoon, extending its rally after jumping 28.6% last month, according to FactSet data. The chip maker contributed 1.1% to the S&P 500’s return in February, making it one of the key drivers behind the index’s gains last month.
S&P 500 Performance and Projections
As of Monday afternoon trading levels, the S&P 500 has climbed around 7.7% this year. BofA Global Research has raised its year-end target for the S&P 500 to 5,400 points, indicating a positive outlook for the market.
Market Movement and Yields
Despite some fluctuations, the U.S. stock market was trading mostly lower on Monday afternoon. The S&P 500 hovered around 5,137, the Dow Jones was down 0.1%, and the Nasdaq Composite retreated 0.2%. The S&P 500 faced challenges in rising due to increasing yields in the Treasury bond market.
Treasury Bond Yields
The yield on the 10-year Treasury note was up about four basis points at around 4.22% on Monday afternoon. Bond yields and prices move in opposite directions, impacting market movements and investor sentiment.