Finance
Nvidia helped the stock market storm back, but the broader theme of this summer never went away
The S&P 500 (^GSPC) is back near all-time highs.
A recent rally in the technology sector, including a nearly 30% surge in Nvidia ( NVDA ), has helped push the index up more than 7% since its August 5 low.
At the time, the “Magnificent Seven” tech stocks – Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA) and Nvidia (NVDA) – had added more than $1.4 trillion in market cap, nearly half the S&P 500’s $3.2 trillion market cap since August 5.
After a huge drop in July, the recent rally helped pull the Nasdaq Composite (^IXIC) out of correction in 11 days. This is the shortest correction since October 2011.
Ned Davis Research chief US strategist Ed Clissold recently told Yahoo Finance that given the way technology led the losses during the pullback, it “makes sense that they will recover.”
And now some of the industry’s biggest names are sitting back near 52-week highs ahead of a crucial earnings report from Nvidia on August 28.
During second-quarter earnings season, some of Nvidia’s AI-powered rivals offered a mixed bag of results that struggled to meet Wall Street expectations.
“This would be the ninth day in a row that the S&P has risen,” Dan Niles, founder of Niles Investment Management, told Yahoo Finance on Tuesday. “It’s the longest streak since 2004. I wouldn’t necessarily put that in an Nvidia print.
“But I think if you don’t worry about what happens the next day and you think about this over a period of several years, it should be in pretty good shape.”
And while AI trading has once again led the market’s latest leg higher, there are also promising developments at play beneath the surface.
The equal-weighted S&P 500 index (^SPXEW), which is less affected than the cap-weighted S&P by moves in Big Tech, just hit a new all-time high. Sectors like Utilities (XLU), Consumer Staples (XLP) and Healthcare (XLV) are now at 52-week highs, while the Financials sector (XLF) is currently at record levels.
“This has been a very healthy rally in our view,” JPMorgan U.S. equity strategist Abby Yoder told Yahoo Finance. “It’s been this broadening. The breadth is the best it’s been since the summer of last year. In terms of participation in different sectors, different names.”
Still, the S&P 500 is up nearly 18% this year, surpassing the equal-weighted index’s nearly 9% gain this year.
“The reality is that in bull markets, generally all sectors rise,” said Kevin Gordon, senior investment strategist at Charles Schwab.
In July, Gordon’s team at Schwab pointed out in Yahoo Finance’s Chartbook that the number of S&P 500 companies that outperformed the index over a two-month period had fallen to an all-time low.
Since then, that story has been completely reversed. As of Monday’s close, about 58% of S&P 500 members outperformed the index, the biggest outperformance since November 2022, when the current bull market began.
“The trend is much more important,” Gordon said. “Based on these statistics, things look relatively healthy.”
Recent economic data has shown a slowing but still growing U.S. economy, and market action in recent weeks is in line with the soft landing-fueled widening of trading that strategists have been discussing since early 2024.
And while technology will likely still contribute to the rally, JPMorgan’s Yoder said the rotation in other areas could have more room as “the growth backdrop looks healthy and we’re about to start some Fed policy.” . [interest rate] cutting cycle as well.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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