Technology Companies' Shares Rise as Traders Rotate Towards Mega-Cap Companies

Shares of technology companies saw an increase as traders shifted their focus towards the largest and fastest growing companies on the S&P 500. However, some strategists are cautioning that this trend could be a warning sign, as the number of mega-cap companies leading the stock market this year continues to dwindle.

A Broader Rally vs a Narrow Market

J.D. Joyce, the president of financial advisory Joyce Wealth Management, points out that the market is becoming increasingly narrow, which is not as healthy as a broader rally. This narrowing trend raises concerns about the overall market's stability.

Negative Territory for S&P 500

Strategists who observe the S&P 500 note that if it was adjusted to not be weighted by market capitalization, it would be in negative territory for the year to date. This observation further reinforces the idea that the dependence on mega-cap tech companies to hold up the market may be risky.

The Downside of S&P Equal Weight

Lorenzo Di Mattia, manager of hedge fund Sibilla Global Fund, believes that the S&P Equal Weight index is even worse compared to the S&P, transportation, and Russell 2000 indexes. This further highlights the potential dangers of relying heavily on mega-cap tech companies.

Unfair Tactics Alleged by Microsoft CEO

During the landmark U.S. antitrust case against Google, Microsoft CEO Satya Nadella accused Alphabet's Google of using unfair tactics to undermine Microsoft's Bing search engine. These allegations add another layer of complexity to the ongoing legal battle.

Tesla's Sales Momentum Slows

Tesla shares experienced a decline after the electric-car maker revealed that sales momentum had slowed down during the third quarter. The temporary pause in production for factory upgrades contributed to this dip.