NEW YORK - A rally that has propelled U.S. equities to record highs increasingly rests on red-hot chipmaker Nvidia and a handful of other giant stocks, reviving concerns that the market’s performance has become tied to a cluster of companies.
"If these names stop performing well ... and we don't see the rest of the market providing that support, that could potentially be a source of vulnerability," said Angelo Kourkafas, senior investment strategist at Edward Jones. "We were all excited about the broadening out of the recovery," said Jack Manley, global market strategist at J.P. Morgan Asset Management. "It appears to have stalled out, at least in the first half or so of the year."
Some investors believe the concentration simply reflects the companies’ economic strength and is not in itself a cause for alarm. "That earnings outperformance gap will start to narrow," Edward Jones' Kourkafas said. "Investors shouldn't give up on that theme of broadening leadership this year."
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