S&P 500: You Just Missed A $1.1 Trillion Tech Stock Rally
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If you blinked, you likely missed it. Patient S&P 500 tech and communications stock investors just scored a $1.1 trillion rally in less than a month.
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Led by $100 billion-plus market value jumps by S&P 500 tech and tech-related titans like Microsoft (MSFT), Google parent Alphabet (GOOGL) and Apple (AAPL), the sectors are back to their wealth-minting ways. The value of the two sectors jumped more than a whopping trillion dollars since the tech sector hit its recent low this year on May 12, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
It’s a sign S&P 500 technology stocks, largely missing from the rally this year, are regaining their mojo.
They’re now joining in on what’s been a broadening rally all year — pulling in all S&P 500 sectors. Upwards of “97% of the 147 sub-industries in the S&P 1500 were trading above their 40-week, or 200-day, moving
average,” said Sam Stovall, market strategist at CFRA.
The S&P 500 Technology Reawakening
The Technology Select Sector SPDR ETF (XLK) is now up 9.2% from its recent low this year. And the related Communication Services Select Sector SPDR (XLC) is 7% higher since then. That ranks these sectors among the top three of the 11 S&P 500 sectors during this time period, just behind the smaller Real Estate Select Sector SPDR (up 11.4%).
Seeing a bounce back in S&P 500 technology stocks is a welcome sight this year. All S&P 500 sectors are higher in 2021 so far, as the SPDR S&P 500 ETF Trust is up 13.8%. But technology stocks had been lagging most of the year, which explains why they’re up just 10.3% and below average performers.
But that seems to be changing fast.
Microsoft’s $157 Billion Move Lifts S&P 500 Tech
If you’re looking for the S&P 500 technology stock minting the most new wealth, it’s Microsoft. The IBD Long-Term Leader jumped 8.7% to 259.89 in just the nearly month-long tech-stock rally. That gain puts $157 billion — the equivalent of six AMC Entertainments (AMC) — into investors’ portfolios. Microsoft is the No. 1 wealth creator in the S&P 500 since the tech sector’s lows this year.
Amazingly, though, S&P 500 analysts see more gains coming. They think Microsoft should be worth 294.33 a share in 12 months, or more than 13% higher. Analysts also think Microsoft will earn $7.77 a share in 2021, up more than 34% year over year. That’s an astounding profit growth rate for a company of this magnitude. Should you buy Microsoft stock now?
Alphabet Is Lighting Up S&P 500 Communications
S&P 500 technology and communications firms are closely intertwined. But they’re both playing more active roles in the market’s rally.
Alphabet stock is up even more than Microsoft’s this year: 39.7% to 2,200.25. It’s a powerful rally that’s added $154.1 billion in market value since the S&P 500 tech sector’s recent low in May.
Analysts, though, remain bullish on this communications services sector leader. S&P 500 analysts think Alphabet will trade for 2,797.91 a share in 12 months, or 27% more. Alphabet is expected to earn $87.28 a share in 2021, up more than 48% from 2020. Should you buy Alphabet stock now?
Don’t Rule Out S&P 500 Technology, Communications
So while S&P 500 technology stocks didn’t drive markets in 2021 so far, their role is growing. Fast.
Just eight of the 96 S&P 500 technology and communications stocks are worth less now than at the tech’s sector’s low in May. And the largest loss is the $20 billion market value drop in fallen Blue Chip, AT&T (T).
And some gains are turning heads. Thanks to a powerful 23.3% gain this year, for instance, communications giant Facebook (FB) is now worth $954.9 million, just shy of $1 trillion. It added $97 billion in market value just since May 12.
That gives technology and communications investors plenty to like.
Top Gains In S&P 500 Tech And Communications
Biggest market value gains from tech’s recent lows on May 12, 2021
| Company | Ticker | Stock YTD % ch. | % stock ch. from low* | Market value gained from low ($ millions) | Sector |
|---|---|---|---|---|---|
| Microsoft | (MSFT) | 16.8% | 8.7% | $157,334.6 | Information Technology |
| Alphabet | (GOOGL) | 39.7% | 11.3% | $154,078.3 | Communication Services |
| Apple | (AAPL) | -1.7% | 6.3% | $128,661.6 | Information Technology |
| Nvidia | (NVDA) | 38.0% | 31.0% | $106,504.7 | Information Technology |
| (FB) | 23.3% | 11.3% | $97,029.6 | Communication Services | |
| PayPal Holdings | (PYPL) | 17.4% | 14.6% | $41,139.0 | Information Technology |
| Adobe | (ADBE) | 11.4% | 18.0% | $40,675.6 | Information Technology |
| salesforce.com | (CRM) | 10.7% | 17.0% | $33,869.9 | Information Technology |
| Visa | (V) | 7.0% | 6.1% | $28,686.1 | Information Technology |
| Broadcom | (AVGO) | 8.7% | 12.7% | $22,755.5 | Information Technology |
Sources: IBD, S&P Global Market Intelligence, * from May 12, 2021 S&P 500 tech sector low
Follow Matt Krantz on Twitter @mattkrantz
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