Invesco measures the current market concentration of supporting mega-caps to the 2000 bubble
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Invesco noted that despite the narrow concentration of mega-cap names that are supporting the S&P 500 (SP500), it doesn't mean that a recession will be seen in 2023. In fact, the ETF issuer stated âthe recession is unlikely to arrive this year.â
Investors have noticed a clear performance driver for the S&P 500âs topside moves in 2023 have been heavily supported by names like Nvidia (NASDAQ:NVDA), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and other mega-cap names, which according to Invesco in theory should cause concern.
The firm highlighted that the S&P 500 Index is currently more concentrated in its top 10 holdings now than it was at the peak of the 2000 equity market bubble.
However, Invesco stated: âThe gap between the market share and earnings share of the top 10 companies is currently only one-third of what it was in 2000. This suggests that the fundamentals of todayâs mega-caps are significantly stronger.â
It added: âThe current valuations of the top 10 holdings in the S&P 500 Index donât compare to the 1999 Nasdaq bubble. Then, the median price-to-sales of the top 10 largest NASDAQ Composite Index companies by market capitalization was 21.9x. Currently, for the S&P 500 Index, itâs 5.8x.â
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