How much tech is too much tech?
The entire stock market is bathed in the glow of Big Tech now, and some investors are beginning to squint against the glare.
Information-technology stocks, as Standard & Poor's classifies them, have driven more than half the 8 percent gain in the S&P 500 index this year. Apple and Amazon have become the first $1 trillion market-capitalization companies in the U.S. And it's not just the giants: The equal-weighted S&P tech sector ETF is up a whopping 18.6 percent this year.
The tech sector now makes up 26 percent of the S&P 500 — its highest weighting since it peaked at just above 29 percent in the year 2000. And if it also included consumer-discretionary bellwether Amazon — a software-and-data-driven company with a huge cloud-services division that most assuredly acts like a tech business and a tech stock — then tech would already be a larger chunk of the index than it was at the peak of the internet bubble in 2000.
Source: Bespoke Investment Group
Whenever a sector has grown to be the largest, its performance over ensuing years has been disappointing. It happened at the last tech peak from 1999 to 2000, and when financials surpassed 18 percent of the S&P 500 in 2007.