We are having a low volume week in the stock market as equities grind higher, following one of the most exciting market weeks of the summer. The US just experienced the worst economic contraction in modern history with the US Commerce Department reporting an annualized GDP decline of 32.9% last week. Unemployment remains at its highest level since the Great Depression, and jobless claims remain steady at more than 1 million per week.
Now the S&P 500 is only 2% off its all-time highs with secular tech continuously propelling the market higher. We need cyclical sectors like utilities, REITs, industrials, financials, and energy stocks to start participating in this market rally if we are going to continue higher.
Will the sensational tech-driven rally continue, or have the markets gone too far too fast?
The Great Divide
The 5 largest tech innovators, aka Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) , and Facebook (FB - Free Report) , all hit all-time highs over the past 2 weeks demonstrating vicious share price surges from the March lows.
While these 5 names drive a continuously larger portion of the S&P 500 (currently around 23%), their gains alone will not be enough to keep the equity markets tenacious rally going.
There is still a massive performance divide between the tech-driven Nasdaq 100 and other sectors. Year-to-date the Nasdaq 100 is outperforming the S&P 500 by 24%, utilities by 31%, industrials & REITS by 37%, and banks by an astounding 59%.
We are going to need cyclical to start joining the stock market recovery before we push any higher.
Stocks In The Video
SPDR Industrial ETF (XLI - Free Report) , SPDR Utility ETF (XLI - Free Report) , Vanguard REIT ETF (VNQ - Free Report) , SPDR Bank ETF (KBE - Free Report) , Johnson Controls (JCI - Free Report) , and Goldman Sachs (GS - Free Report) .
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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