Since the beginning of this year, under the leadership of the "Big Seven" in technology, the US stock market has performed well. Although many Wall Street bosses have repeatedly warned that this is a foam, in fact, no one seems willing to short these stocks at present.
According to data from the team of quantitative equity strategists at Bank of America, short positions in the technology "Big Seven" have fallen to their lowest levels in history, accounting for only about 1% of their total market value.
According to FactSet data, the total market value of the "seven giants" - Apple Inc., Microsoft Corp., Google's parent company Alphabet Inc., Amazon. com Inc., Nvidia Corp., Meta, and Tesla Inc. - approached $11.3 trillion on Wednesday, with the highest market value of the US company, Apple, exceeding $2.8 trillion.
However, in a report to clients, Bank of America's team also questioned who would stay to buy these large stocks as their valuations reached extremely high levels relative to other stocks in the market.
According to Dow Jones Market Data, all the gains in the Standard&Poor's 500 Index in 2023 were driven by these seven companies, offsetting the cumulative decline in stocks of the other 493 companies in the index.
According to data from Bank of America, long only funds have increased their holdings in all constituent stocks of the technology "Big Seven" except for Apple and Tesla.
Many Wall Street strategists believe that these companies can continue to outperform the market. Strategists at Capital Economics stated in a client report on Wednesday that due to their strong balance sheets and profit growth prospects, these companies may continue to outperform the market even during economic downturns.
Given our pessimistic view of the US economy, we believe that the US stock market will perform quite poorly in the near future. However, the largest component of the S&P 500 index may perform better, "the team said.
Strong profit expectations have also contributed to their bullish views. To some extent, due to the prosperity of artificial intelligence, the expected profit growth of the "Big Seven" in the next year will dwarf other components of the S&P 500 index.
As of the close of the US stock market on Wednesday, the S&P 500 index rose 0.1% to close at 4382.78, marking the eighth consecutive day of gains; The Nasdaq Composite Index rose 0.08% to 13650.41, marking its ninth consecutive day of gains. The rise of the Big Seven helped offset the weakness of other Nasdaq components, with Nvidia and Microsoft being the best-performing components.