Great Seven Drive bumper year for US equities
This year's US stock market rally has been driven by huge gains for the 'Magnificent Seven' tech giants.
Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla are up between 50 and 240 percent in 2023.
Together they are now worth more than £9 trillion and were responsible for around two-thirds of the S&P 500's profits this year.
The rise of artificial intelligence – a technology that some believe could transform the world – helped lift valuations.
And the prospect of lower interest rates next year makes bets on the future profits of growth stocks more attractive.
Bumper gains: Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla are up between 50 and 240 percent in 2023
Nvidia's shares soared more than 200 percent, taking its value to almost £1 trillion, thanks to demand for its chips for use by AI programs such as ChatGPT, which produce human-like content from poems to software code.
Hubert de Barochez, economist at Capital Economics, recently told clients: the outperformance of “US stocks” is almost entirely due to the few sectors that include “Big Tech” companies.
While we expect a broader stock market rally next year, we suspect these sectors will continue to lead the way.”
Dan Ives, technology analyst at Wedbush Securities, said: “In our view, the new tech bull market has begun.” But AJ Bell's Laith Khalaf said expectations for the shares are now so high that they could become vulnerable.