This morning, the S&P 500 is currently over its average for one month at nearly 3,000…
The Dow Jones is relatively steady above 27,000.
And some underlying analysis shows that the U.S. market may be pretty extremely reliant on a few big tech companies.
There’s a shorthand that investors use for technology leaders: “FANG” or “FAANG.” But there are two variants of this acronym…
The FAANG group includes Facebook, Amazon, Apple, Netflix and Google Alphabet, while FANG excludes Apple from the equation.
A Closer Look
Looking at actual data on what’s accounted for 19% of the S&P 500’s rally this year, Apple actually stands out ahead of Facebook, with a total growth number of 4.7% (as a contribution of the total market rally) to Facebook’s 3.7%.
Amazon, with its larger market capitalization nearing $1 billion, contributed 4.4% of that overall growth. Microsoft accounted for 6%. The irony of Microsoft not being included in FAANG (or FANG) is notable. The tech giant responsible for its dominant operating-system legacy has a market cap of over $1 trillion.
There’s also speculation that emergent antitrust activity might compromise the future growth and financial power of some of these firms.
Reports of impending U.S. legislative action on the FAANG group has some investors worried that the companies may not stand up to scrutiny when it comes to the analysis of their market dominance.
Amazon, for instance, commands such a big part of the e-commerce market that it’s a popular target for economists who argue that the gains of the 21st century must be more widely distributed.
At the same time, Facebook’s political scandals are raising eyebrows and leading officials to ask questions about the role of the dominant social media platform in American life.
Regardless of whether investors include Apple, the news that U.S. market growth is heavily reliant on big tech represents a significant signal for long-term trading.
