April 22, 2024

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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.


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
Facebook (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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