speaking at the same conference<\/a>, said that \u201cthere are things that will change sentiment and will create drawdowns, or change the perspective on the growth trajectory, and none of us are smart enough to see them until they actually occur.\u201d<\/p>\nBut fears over stratospheric AI valuations have been the talk of Wall Street for most of the year. As those stocks continue to soar in value, they represent ever more of the value and momentum of key indexes like the S&P 500. <\/p>\n
\u201cAI related stocks have accounted for 75% of S&P 500 returns, 80% of earnings growth and 90% of capital spending growth since ChatGPT launched in November 2022,\u201d a recent analysis from J.P. Morgan Asset Management found.<\/p>\n
\u201c\u200b\u200bThe Magnificent 7 comprise over 30% of the S&P 500 \u2014 a level of concentration exceeding even that of the dot-com bubble,\u201d Erwan Jacob, macro analyst with LSEG, wrote in a note Tuesday. The \u201cMagnificent 7\u201d companies are Apple, Amazon, Alphabet, Microsoft, Nvidia, Meta Platforms and Tesla.<\/p>\n
\u201cIt remains unclear whether such expenditures will be met with corresponding revenues,\u201d Jacob noted.<\/p>\n
Still, this year the S&P 500 is up more than 15% overall, while the Nasdaq Composite, which more closely tracks the biggest tech firms, remains in the green by 20%.<\/p>\n
Yet experts say that a pullback is not always cause for concern.<\/p>\n
\u201cOn average, the [S&P 500] experiences three drawdowns of between 5% and 10% each year,\u201d Jeff Buchbinder, chief market strategist at LPL Financial, wrote during a short sell-off in August 2024. \u201cCorrections of 10\u201320% are also quite common, having occurred once per year on average.\u201d<\/p>\n
Meanwhile, the dollar index, a measure of the strength of the U.S. dollar against a basket of foreign currencies such as the yen, pound sterling and euro, was slightly higher, rising to its best level in about three months.<\/p>\n","protected":false},"excerpt":{"rendered":"
The global stock rally hit a wall Tuesday, dragged lower by artificial intelligence and tech companies. The S&P 500 fell 1.2% and the Nasdaq declined 2%. The Russell 2000, which tracks smaller companies, tumbled 1.4%. Gold, a traditional safe haven for investors when markets are volatile or uncertain, dipped about 1.6%. Within the S&P 500, <\/p>\n","protected":false},"author":0,"featured_media":4204,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-4203","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"_links":{"self":[{"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/posts\/4203","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/comments?post=4203"}],"version-history":[{"count":0,"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/posts\/4203\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/media\/4204"}],"wp:attachment":[{"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/media?parent=4203"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/categories?post=4203"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/tags?post=4203"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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