Apple and Microsoft Drive S&P 500 to Record High

Apple and Microsoft, two of the world’s largest companies, drove the S&P 500 U.S. stock index to yet another record high. Wall Street’s optimism regarding the earnings potential of major tech companies, particularly in the field of artificial intelligence, continued to bolster the market as summer approached.

The S&P 500 surged by 0.8% to reach an unprecedented level of 5,473.30, marking a 15% increase year-to-date. This uptick came during a relatively quiet week for economic and earnings reports, with the Juneteenth holiday on Wednesday shortening the trading week. The positive momentum was largely fueled by the optimism surrounding the ongoing AI advancements in big tech companies.

Apple and Microsoft, the world’s two largest companies in terms of market capitalization, saw their stock prices climb to record highs, pushing their respective valuations to approximately $3.3 trillion each. This rise outpaced the 0.7% rally seen in the median S&P constituent’s stock on Monday.

This marks the sixth instance since June 5 that the S&P has closed at a new record high, highlighting the sustained bullish sentiment in the market. Other notable gainers on Monday included Tesla, the electric vehicle manufacturer, whose shares rose by 5% to reach a seven-week high. Semiconductor chip developer Broadcom also saw a 5% increase, setting a new record and bringing it within 3% of surpassing Berkshire Hathaway as the seventh-largest company in the U.S.

Apple and Microsoft’s market values are approximately 95 times larger than the median S&P company’s market value of around $35 billion. Along with Nvidia, which boasts a market cap of $3.2 trillion, these companies account for roughly a fifth of the S&P’s total market capitalization, leading to some concerns about the index’s overall health due to its narrow leadership.

After trailing behind its peers for much of the last year, Apple’s stock experienced a significant surge over the past week, gaining 12% since the announcement regarding generative AI’s integration into iPhones. Apple has added approximately $350 billion in market cap over the last week, despite analysts’ reservations about the company’s flat revenue growth being able to sustain further gains.

The unexpected strength in the equity market rally this year has caught many on Wall Street off guard, given the high interest-rate environment and modest earnings growth. The median year-end S&P price target among strategists, as of the end of last year, was below 4,600, approximately 20% below Monday’s level. Nonetheless, firms like Goldman Sachs still see a favorable setup for the market.