The S&P 500 is trading around record levels after just four stocks led nearly half of its gains in February, according to BofA Global research.
“U.S. stocks outperformed other asset classes including bonds” last month, equity analysts and quantitative strategists at Bank of America said in a March 2 research note. “But the breadth is still narrow.”
Technology companies Megacap Nvidia Corp. NVDA,
Meta Platforms Inc. Meta,
Amazon.com AMZN,
Microsoft Corporation (MSFT),
It contributed 45% of the S&P 500's total return of 5.3% last month, according to the note. However, all of the index's sectors rose in February, led by “cyclical stocks” including consumer discretionary, industrials and materials, strategists found.
“Despite the new highs achieved by the S&P, sentiment is not yet cheerful,” they said.
The S&P 500 SPX ended Friday at 5,137.08, starting March with a new all-time high that marked its 15th record close this year, according to Dow Jones Market Data.
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While the technology and communications services sectors outperformed the index last month, they were “down in the rankings after being the top two sectors in January,” strategists at Bank of America said.
The technology sector in the S&P 500 saw a total return of 6.3% in February, while communications services rose 5.7% on a total return basis, according to FactSet data.
So-called big tech stocks — including Nvidia, Meta, Amazon, Microsoft and Apple Inc.
Google's parent company Alphabet Inc.GOOGL,
Google,
And Tesla company TSLA,
– It spans across the technology, communications services, and consumer discretionary sectors in the S&P 500 and has a significant weighting in the index.
Shares of chipmaker Nvidia, which has a market value of about $2 trillion, rose in February as the company continues to ride the wave of optimism surrounding artificial intelligence.
The chip maker's stock was trading 5.1% higher Monday afternoon, extending its rally after jumping 28.6% last month, according to FactSet data, at last check.
Nvidia contributed 1.1% to the S&P 500's returns in February, the largest of the four stocks that accounted for 45% of the index's gains last month, a Bank of America note showed.
“Only 26% of stocks outperformed the index” in February, which is “similar to recent months,” Bank of America strategists said. The S&P 500 is up about 7.7% so far this year based on Monday afternoon trading levels, FactSet data shows, at last check.
Meanwhile, Bank of America Global Research raised its year-end target for the S&P 500 to 5,400 points, from 5,000, according to a separate note from the bank dated March 3.
The U.S. stock market was trading mostly lower Monday afternoon, but the S&P 500 was flat at about 5,137, according to FactSet data, at last check. The Dow Jones Industrial Average (DJIA) fell 0.1%, while the tech-heavy Nasdaq Composite fell 0.2%.
The S&P 500 was struggling to rise in early trading Monday afternoon as yields rose in the Treasury market.
The yield on the 10-year Treasury note BX:TMUBMUSD10Y rose about four basis points at about 4.22% on Monday afternoon, FactSet data showed, at last check. Bond yields and prices move in opposite directions.
