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Tesla drives disrupted technology exposure of S&P 500 as index hits record highs in October


Tesla is pushing for exposure to disruptive technology in the S&P 500 index, with Big Tech helping to push the U.S. stock market benchmark to new heights this month.

The technology sector of the S&P 500 plus Google Parent Alphabet, Facebook, Amazon.com and Tesla added up to 40% of the market-capital-weighted index, according to a DataTrek research note on Wednesday. “The top 6 names in no other broader global market index weigh 24 percent,” including Apple AAPL,
-0.24%
And Microsoft MSFT,
+ 4.44%,
The note shows.

Nicholas Colas, co-founder of DataTrek, said in a note, “We’ve had half the fun since DataTrek started that ‘Tech’ will eventually be 50 percent of the S&P 500 but thought it might be an event in 2030.” “The way things are going, it’s going to come a long way.”

Shares of the electric-vehicle company have reached record highs after Hertz Global Holdings announced plans to order its cars, raising Tesla’s market value to more than $ 1 trillion this week. Tesla, co-founded by its CEO Elon Musk, joined the S&P 500 in December.

S&P 500 SPX,
-0.24%
It closed at another new peak on Tuesday and is trading about 0.1% higher on Wednesday afternoon, according to Factset data. Shares of Tesla TSLA,
+ 1.58%
Afternoon transactions rose about 2%, bringing the electric-car company’s profit to about 34% in October and about 47% so far this year, data show, at the last check.

“The Tesla assembly is making the S&P 500 a more focused bet on disruptive technology,” Kolas wrote, pegging at 2.1% of the index. Tesla “is now in the ‘Must Watch’ zone with the rest of the US Big Tech for potential impact on daily movements in the S&P 500.”

Views: Microsoft tops $ 20 billion for first quarter, stock rises to record highs

Information Technology SP500.45,
+ 0.40%,
The only sector of S&P 500 trading on Wednesday afternoon was communications services and consumer consideration, according to factset data. Tesla and Amazon are part of the Consumer Consideration Sector of the Index SP500.25,
+ 0.72%,
When Google and Facebook FB,
-0.68%
In the S&P 500 communications service, DataTrek shows notes.

S&P 500 Consumer Consideration Sector XLY,
+ 0.35%
According to DataTrek, it can no longer be used as a proxy for US consumer spending.

“The reason is Amazon AMZN,
+ 0.78%
And Tesla has 20 percent and 19 percent of each index, or 39 percent together, ‚ÄĚColas wrote. “The names you’ve added to this group, such as Home Depot (9 percent weight) and McDonald’s (4 percent), don’t make much of an impact.”

Although the heavy exposure to the S&P 500 Big Tech has put it at risk of a “sizeable correction,” Datatrek said, “We want to own the S&P 500 in the long run more than Europe or Japan or even China, just because you need ownership.” There are many disruptive technologies that you can endure to get decent returns. “



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