Narrow breadth of current bull market in US stocks warrants caution
Big Tech stocks could well be winners in an AI-infused future. But investors should strive for balance, given tech’s heavy weight in key stock indices
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SINCE the start of the year, hopes have run high that the US Federal Reserve would pause its rate-hike cycle and begin to cut rates. US rates were hiked three times this year, making a total of 10 increases since March 2022, but expectations have been building that the Fed is done with hiking – and these expectations have only strengthened in recent weeks.
Markets, as they are wont to do, have run ahead. A tech-driven rally has pushed US bellwether stock indices into bull territory. To date, the S&P 500 has risen by more than 20 per cent since its October low; the Nasdaq Composite Index was already in a bull run since earlier in the year.
Year-to-date returns are impressive, after the double-digit losses of 2022. The Nasdaq has gained 29 per cent, and the S&P 500 more than 13 per cent.
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