Topline
Big technology stocks led major stock indexes to new heights Wednesday, with the world’s largest company, Apple, rallying toward the next unattained milestone in today’s bull market—becoming the first $4 trillion company—and the potential emergence of another entrant into the illustrious trillion-dollar club.
It's been a very nice stretch for long investors.
Key Facts
The S&P 500 and tech-dense Nasdaq indexes rose about 1% apiece, with the S&P notching a new intraday peak of 5,635 and the Nasdaq registering a new high of 18,655; the third major index, the Dow Jones Industrial Average, rose 1.1%, or 440 points, to 39,730—almost 300 points shy of its record of 40,077 set May 20.
Predictably leading the charge in the record runup were by far the world’s three largest companies—Apple (shares up 1.9%), Microsoft (1.5%) and Nvidia (2.7%).
Apple registered a new record-high market capitalizations of $3.57 trillion while Nvidia hit a three-week high of a $3.32 trillion valuation (the fourth-biggest firm in the world, Google parent Alphabet, has a measly $2.37 trillion market cap).
Apple still needs a further 12% rally to actually broach $4 trillion, perhaps feasible considering its share price is up 20% over the last month, but it did become the first company in history this week to ever score a $3.5 trillion or greater market cap, with recent positive momentum stirred by bullishness about upcoming iPhone sales due to the smartphones’ upcoming integration of generative artificial intelligence.
There’s also a new kid on the block looking to crack into the eight-member group of firms with market values of $1 trillion or higher: silicon chip maker Taiwan Semiconductor Manufacturing Company, whose shares rallied 3.5% to a market cap of $991 billion, needing just a further o.9% stock gain to crack a 13-figure valuation.
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Big Number
$10.3 trillion. That’s Apple, Microsoft and Nvidia’s combined market value. That is more than the combined gross domestic product of the world’s third- and fourth-largest economies, Germany and Japan, in 2023, and the combined market cap of the 350 smallest companies listed on the S&P.
Key Background
The West Coast tech trio’s dominance helps explain why the Dow has severely underperformed the S&P and Nasdaq recently, as the Dow’s price is weighted based on stocks’ price per share, not by constituents’ total valuations, as well as the Dow’s exclusion of Nvidia. The stock market has continued to set fresh highs throughout 2024 despite fairly unfavorable macroeconomic conditions, namely the highest interest rates since the start of the millennium. Even the most optimistic Wall Street strategists didn’t foresee the S&P crossing 5,600 heading into this year, while mainstream groups like Goldman Sachs set far milder targets, with Goldman setting a 4,700 price target for the index for the end of 2024 (it would take roughly a 16% drop for the S&P to fall back to that level). The S&P is up 16% so far this year, building on 2023’s 24% rally and completely erasing 2022’s selloff, which in turn was stocks’ worst year since the peak of the Great Recession in 2008. The S&P rose an average of 8.8% annually from 1972 to 2022.