As the bull market stretches on, the Wall Street rally is heavily concentrated in the technology and communication sectors.
Technology Remains A Backbone
In a Thursday post on X, The Kobeissi Letter, citing data, revealed that technology stocks are driving historic market gains, followed by the communication services.
The Information Technology sector has led since the bull market began on October 12, 2022, returning 225.7%, while the Communication Services sector soared 212.3%. Both sectors surpassed the S&P 500 gains by “more than 100 percentage points”. The broad market index has delivered returns of 107% in the same time frame.
The letter noted, “The market cannot thrive without tech.”
AI Boom Powers
The ongoing AI boom has concentrated the S&P 500 in a small group of mega-cap technology stocks, with nearly half of new investment flows directed toward AI-linked equities.
The 10 largest U.S. stocks account for a record 41% of the S&P 500’s market cap, 14 percentage points higher than at the 2000 Dot-Com Bubble peak.
Other Sectors
Other sectors like industrials, consumer discretionary, and financials are lagging the S&P 500 index, having risen 102.1%, 76.6%, and 70.8%, respectively, the letter added.
Rising inflation pressures have not only hurt consumer spending but also hit several sectors, including transportation and the food industry, as geopolitical tensions with Iran push oil prices higher.
Real estate and healthcare are the least performing sectors with gains of 28.8% and 18.8%, respectively, during the bull market
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.