top braking news about News Bottom

These 5 giant stocks are driving the U.S. market now, but watch out down the road

June 30, 2020

Due to the pandemic and economic crisis, the current situation of five giant stocks, Microsoft, Apple, Amazon, Alphabet, and Facebook, has changed its position. Their shares by market capitalization now are the following: Microsoft 1.64%, Apple 0.26%, Alphabet (by Google) 0.63%, Amazon 2.44%, and Facebook 2. 24%. In comparison to past decades, this share is significantly lower.

Although shares of the largest technology companies in the Big Tech subgroup during the pandemic period are not as they were before, they still show better momentum than the assets of other vendors. Browsers attribute this to the fact that, against the backdrop of COVID-19, many people have now switched to remote mode, which means that the dependence on online services has increased even more.

On June 9, shares of Facebook, Apple, and Amazon added more than 3%, while Microsoft securities went up by a little less than 1%. Apple with a record high for the company of nearly $1.5 trillion leads in capitalization among technology giants. In the Big Tech subgroup, only Facebook does not yet have a capitalization cap of $1 trillion.

Meanwhile, Wells Fargo analysts recently predicted that thanks to the cloud-based business, Microsoft’s market cap could soon exceed $2 trillion. Among the five giants, only Alphabet (by Google) is far away from a record high. According to CNBC, Alphabet’s stock quotes are currently about 5% below their all-time high of $1,524, which was registered at the auction on February 19, 2020.

Stock Market

All in all, the total market capitalization of the five largest US technology corporations rose to $5.6 trillion. Their value has recovered after the situation when in March the price of their shares, as well as the shares of other companies fell quite a lot.

As the Financial Times writes, the total capitalization of these stocks has grown by $1.7 trillion, which is 43% and is better than average growth rates for US companies as a whole. Thanks to this, the share of five stocks in the total capitalization of companies from the S&P 500 has also grown, as now they are 24% of the total value of companies from the S&P 500. 

Why is it important for the S&P 500 to keep current levels?

US stock indexes positively closed trading on the 29th of June, bouncing up after a powerful fall on the eve. The S&P 500 grew in 1.47% to 3,053 points. The index of incomplete sales increased by 44% in the real estate market in May, which strengthened investor confidence in the restoration of economic activity. The indices were also supported by the growth of Boeing shares when the Federal Aviation Administration confirmed the start of key tests for certification of 737 MAX aircraft.

Global stock markets today show mixed dynamics under the influence of the ongoing pandemic. The head of the World Health Organization said that the wave of incidence was only intensifying and called for maximum caution. In the United States, statistics of daily infection remain above 40,000 people. The authorities of several coastal states intend to close the beaches on weekends. In Arizona, bars, gyms, and movie theaters have been suspended for 30 days. In New York, it is planned to postpone the resumption of restaurants.

Relations between China and the United States are also in focus. The Chinese parliament approved the Hong Kong National Security Act, which the US has actively opposed. US officials responded by canceling preferences for Hong Kong since Monday, including the effect of exemptions from export restrictions. These actions were expected on the part of Beijing and Washington, so they may not influence the reaction of investors. Nevertheless, the escalation of the conflict between the two largest economies remains risky for stock exchanges.

Asian stocks are trading positively. Japanese Nikkei is gaining more than 1%. Hong Kong Hang Seng is growing at 0.55%. Thanks to the publication of data on business activity indexes in the industrial and service sectors, Shanghai CSI 300 adds more than 1.3%. European exchanges lose within 1%. Demand for safe assets, including US bonds, is neutral. However, experts suppose that the S&P 500 during the upcoming auction will again fall below 3050 points.

Technically, the S&P 500 continues to be tested for its strength. On June 29, the index rose again above the level of 3015 points. Nevertheless, weak indicators are alarming. The RSI indicator remains below the neutral mark of 50, the MACD indicator is in minus. If the S&P 500 fails to hold above 3,000 points, the next likely support levels will be 2940 and 2800 points.

What should stock market investors do?

Stock market manipulators work overtime, convincing investors to invest in stocks as, under current conditions, the ordinary investors are the most significant market participants.

According to the Dow Jones Industrial Index Chart, investors still prefer the five giants. And today it is very important to monitor each of them regularly. For example, Facebook is being attacked by advertisers who object to a lack of control over the content, which could ultimately negatively impact both Google and Twitter. For a long-term investor, significant drops in Facebook, Google, and Twitter are likely to provide an opportunity to buy.

Investing in Stock Market
Investing in Stock Market

The investor should expect a small sell-off from rebalancing the portfolio, and then a rally from the influx of money in the new quarter on the background of the fourth of July holiday, unless unexpected news or activities related to short sales appear on the stock market.

No one can tell with accuracy what will happen next in the markets. Today making investment and trading decisions, based on probabilities and regular observing of important stock market levels and their risks, are the best realistic and profitable approaches.

the Latest news

Investing in Ukrainian Real Estate

The real estate market in Ukraine offers great opportunities for investing. Due to the low prices for real estate which dropped by 20-50% since the times of political and economical crisis in 2013, the real estate sector now provides the chance to enter the market and receive significant revenue from the investment.

Read now

Exon Premier

Great opportunities and benefits of investing with the Exon Premier REIT along with the detailed review of 50th avenue apartment and office complex.

Read now