The S&P 500 is approaching record highs, bolstered by a significant rally in the technology sector, with Nvidia's nearly 30% stock surge playing a pivotal role.Since the index's bottom on August 5, it has risen over 7%, with the "Magnificent Seven" tech giants—Apple, Alphabet, Microsoft, Amazon, Meta, Tesla, and Nvidia—driving this recovery by collectively adding over $1.4 trillion in market capitalization.
This accounts for nearly half of the S&P 500's total market cap increase of $3.2 trillion during the same period.
The recent tech resurgence follows a sharp market drawdown in July, and it has been instrumental in pulling the Nasdaq Composite out of its correction phase in just 11 days, the shortest since October 2011. According to Ned Davis Research's Chief US Strategist, Ed Clissold, tech stocks were expected to lead the rebound given their earlier losses.
Now, many of these tech leaders are hovering near their 52-week highs as investors await Nvidia's crucial earnings report on August 28.
Despite the strong rally, market experts like Dan Niles, founder of Niles Investment Management, advise caution. He notes that while the S&P 500's current nine-day winning streak—the longest since 2004—is impressive, the focus should be on long-term gains rather than immediate outcomes following Nvidia's earnings release.
Investors are encouraged to consider the broader, multiyear potential of these tech giants, especially as the market continues to recover and momentum broadens beyond just a few key players.