Nvidia, Apple, Meta stocks lead market rally year-to-date
Yahoo Finance Live’s Jared Blikre breaks down the current market rally.
Nvidia, Apple, Meta stocks lead market rally year-to-date
Yahoo Finance Live’s Jared Blikre breaks down the current market rally.
Video Transcript
RACHELLE AKUFFO: All right, turning now to our top story on the markets, we're watching a few big stocks driving the current rally, but as the set names behind the market move narrows, is the tech driven shift sustainable? Joining us with more, Yahoo Finance's Jared Blikre. Hey, Jared.
JARED BLIKRE: Yes, concentration risk. This is something that I remember hearing years ago in the leadup to the global pandemic. And we'll get to that in a second. But first, here is a chart of the S&P 500's largest two stocks and how much they're contributing, how much they make up in the index. This goes back all the way to 1975.
And back then, there were two stocks that were dominating the action. It was Ma Bell and Big Blue, AT&T and IBM. Well, fast forward. You can see we got concentration issues rising in 2016, '17, '18, leading into the pandemic. And then in the pandemic recovery, it was really all about a lot of the mega caps and those low-- and those growth stocks that require low interest rates.
So let's pivot now to see what's happened this year. In the NASDAQ 100, we've seen some incredible gains, especially by the mega caps here. And this was meanwhile, while the Dow was barely making traction, while small caps were barely making traction. But you can see Nvidia up 83%. It was up 90% at the end of the quarter. That was only one week ago. Apple up 26%, Meta up 75%, some incredible gains. So people are wondering, will this continue?
Well, historically, when you see this kind of concentration, usually, it only lasts for a period of time, a limited period of time. That's because if you only have some big names holding up the market, once they get whacked, the bottom falls out. And then you have some real selling. What's happened over the last four days, and that's this holiday shortened week, we're seeing a lot more red than green. So the conditions that created that outperformance by the mega caps, not necessarily continuing in this new quarter.
And what are those conditions? Well, it gets back to the bond market. And here's where we want to take a look at what the 10-year T-note yield has done. Here's what it's done these last four days. It's down, but over the year, we can see it had a big drop in the early March, all the way to that banking crisis that unfolded into the middle of the month, and then towards the end of it.
Lower interest rates generally support higher prices in these growth stocks and the mega caps, but we're not seeing that right now. We've seen a rash of economic reports that have disappointed to the downside. And the market reaction has been, well, we don't like that either. So if we are getting into a situation where bad news is bad news, and even lower rates cannot help the growth stocks as much, that is certainly troubling for this one asset class that has really outperformed this year. Rachelle.