Apple and Microsoft have become the largest companies in the S&P 500 index over the past 45 years
Apple and Microsoft have become the biggest contributors to the S&P 500 index in the last 45 years. The two technology giants’ combined stake in the US market’s S&P 500 index stands at 13.3% with Apple’s iPhone manufacturer holding 7.11%, while Microsoft, the software and cloud computing company, owns 6.14%.
The market capitalization of both companies has surpassed $2tn, according to NASDAQ trading data from 23 March. The last time IBM and AT&T had the largest combined weighting in the index was in 1978, says Howard Silverblatt, Senior Analyst at S&P Dow Jones Indices, as reported by Wall Street Journal.
In the midst of the financial crisis in the US, stocks of large technology companies became a new haven for retail investors in the stock market, leading to growth in IT giants’ stocks. Since the beginning of 2023, Apple’s stocks have risen by more than 21%, and Microsoft’s stocks have risen by 13.5%.
Another factor supporting the shares of technology companies is the sharp decline in bond yields and the US Federal Reserve’s slowdown in tightening monetary policy after the bankruptcy of Silicon Valley Bank and Signature Bank.
On 22 March, following a two-day meeting, the US Federal Reserve raised its rate from 4.5-4.75% to 4.75-5% per annum. At the end of the meeting, the regulator suggested that the rate hike cycle had not yet ended, despite the risk of a deepening banking crisis that shook global markets.
“While this may sound like a comment from the ‘Twilight Zone’ for many investors, technology stocks have become the new defensive position, and large technology companies have been the main beneficiaries of the current dynamics,” quotes Business Insider from Wedbush analyst, Dan Ives.