As this round of gains approached its fourth anniversary on October 12th, the S&P 500 remained near record highs, making it the sixth strongest bull market in U.S. history since World War II.
However, currently, the top 10 companies account for about 40% of the market value of this benchmark index, highlighting Wall Street's growing dependence on artificial intelligence.
The four-year bull market of the S&P 500 has brought a 117% increase.
This round of gains began in October 2022 when the U.S. stock market hit bottom. At that time, the Federal Reserve's aggressive interest rate hikes and concerns about an economic recession suppressed valuations.
Thereafter, the market's enthusiasm for artificial intelligence, improved corporate profits, and the resilience of economic growth jointly drove the stock market to rise significantly.
Despite rising oil prices and U.S. Treasury yields climbing above 5%, the S&P 500 has still risen by more than 13% this year.
Companies related to artificial intelligence have always been at the core of these increases.
Nvidia benefits from the demand for AI accelerators, while Microsoft, Alphabet, Amazon, and Meta continue to make substantial investments in data centers and computing infrastructure.
The profit boom brought about by artificial intelligence has also enhanced market expectations for companies' profitability.
Today, only 10 companies account for 40% of the weight of the S&P 500.
The S&P 500 is weighted by market capitalization, which means that larger companies have a greater impact on the index's trend.
According to the data from S& P Dow Jones Indices, as of the end of August, the top 10 constituent stocks accounted for 37.8% of the index.
As of September 25th, based on the tracking data of ETF positions in the S&P 500, this concentration has risen to approximately 40.4%.
Only Nvidia accounts for about 8.1%, followed by large technology companies such as Apple and Microsoft.
This level of concentration creates a significant difference between the performance of the index and the actual experience of ordinary investors.
Coinpaper Previous reports have indicated that despite the benchmark index reaching record highs, 70% of the stocks in the S&P 500 are still at least 10% below their recent highs.
Maya Bennett
Maya Bennett is a financial journalist with experience covering cryptocurrencies, stocks, and broader market trends. Her reporting focuses on Bitcoin, major digital assets, the stock market, monetary policy, as well as economic developments that influence investor sentiment. She is adept at transforming rapidly changing market news into clear and concise reports.
