Topline
The world’s largest companies Apple and Microsoft led the S&P 500 U.S. stock index to another record high, as Wall Street’s bullishness about the earnings prospects of big tech’s artificial intelligence push extends into summer.
Bulls are charging into summer.
Key Facts
The bellwether S&P 500 jumped 0.8% to an all-time high of 5,473.30, extending its year-to-date bounce to 15%.
The gains, which came at the start of a quiet economic and earnings week shortened by Wednesday’s Juneteenth holiday, were unsurprisingly spearheaded by optimism surrounding big technology stocks continuing to enjoy a bump from investor enthusiasm about artificial intelligence prospects.
The world’s two largest companies by market capitalization—Apple (stock up 2% Monday) and Microsoft (1.3%)—rose to record share prices, extending their respective valuations to about $3.3 trillion apiece, easily out-gaining the median S&P constituent’s 0.7% Monday rally.
It’s the sixth time since June 5 that the S&P has closed at a new record price, indicative of the continued bullishness surrounding the market.
Other notable stocks gaining Monday were electric vehicle maker Tesla, whose shares rose 5% to a seven-week high, and semiconductor chip developer Broadcom, whose shares rose 5% to a fresh record, bringing it within 3% of eclipsing Berkshire Hathaway as the U.S.’ seventh-largest company.
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Surprising Fact
Apple and Microsoft are both about 95 times larger than the median S&P company’s market value of about $35 billion. The firms, along with $3.2 trillion Nvidia, account for roughly a fifth of the S&P’s total market cap, raising some concerns about the index’s overall health due to its narrow leadership.
Key Background
After lagging behind its peers for much of the last year, Apple stock has roared over the last week, gaining 12% since last Monday’s announcement on generative AI’s integration into iPhones. Apple has tacked on a cool $350 billion in market cap over the last week, even though analysts have yet to show faith that the company’s flat revenue growth can support further gains. Given the high interest-rate environment and tepid earnings growth, this year’s equity rally caught most on Wall Street off guard. Strategists’ median year-end S&P price target of below 4,600 as of the end of last year is about 20% below Monday’s level, and the likes of Goldman Sachs see a still favorable setup for the market.
