·June 13, 2023·1 min read

S&P 500 Bull Market Kicks Off, But The Dominance Of 7 Stocks Leaves S&P 493 In The Dust – Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), NVIDIA (NASDAQ:NVDA), Tesla (NASDAQ:TSLA), Moderna (NASDAQ:MRNA), SPDR S&P 500 (ARCA:SPY), Amazon.com (NASDAQ:AMZN), Invesco S&P 500 Equal Weight ETF (ARCA:RSP) – Benzinga

The S&P 500 index, represented by the SPDR S&P 500 ETF Trust SPY, officially entered a bull market on June 8, surging more than 20% since its October 2022 lows.

The S&P 493 index, which excludes the performance of only seven of the 500 largest U.S. stocks, remains nearly unchanged in 2023.

Apple Inc. AAPL, Microsoft Corp. MSFT, Alphabet Inc. GOOG GOOGL, Amazon.com, Inc. AMZN, Meta Platforms Inc. META, NVIDIA Corp. NVDA and Tesla, Inc. TSLA are the dominant seven stocks shaping the market landscape in 2023, and the following data will shed light on the reasons behind their influence.

Chart: 7 Most Capitalized U.S. Stocks vs. S&P 500 vs. S&P 500 Equal Weight

Astounding Outperformance: An exclusive index, consisting solely of the seven stocks mentioned above, has skyrocketed by 83% year-to-date, in stark contrast to the 13% gain in SPY and the mere 3% increase in the Invesco S&P 500 Equal Weight ETF RSP.

Remarkable Weight Concentration: Twenty-six percent of the S&P 500 index is represented by these seven companies. Their combined market cap reaches $10.6 trillion compared to the $27 trillion of the other 493 stocks.

Elevated Valuations: The seven S&P heavyweights are significantly overvalued in comparison to the rest of the market. While they trade at an average forward price-to-earnings (P/E) ratio of 40, the S&P 500 index’s remaining 493 stocks trade at an average forward P/E ratio of 17.

Differing Upside Prospects: The seven tech giants currently screen a 5% price upside potential to Wall Street analysts’ current median price target, with Tesla trading 15% higher and NVIDIA trading 17% lower. The remaining 493 companies, on the other hand, have a 13% potential upside to the analysts’ median price targets. Notably, Moderna Inc. MRNA is the S&P 500 stock with the highest gap to the median price target, which is 65% higher than current market prices.