Bloomberg Analyst Balchunas Says Fears Over Narrow S&P 500 Gains Are Overdone
Summary
- Eric Balchunas said concerns that gains in the US S&P 500 Index are concentrated in a small number of large technology stocks are overdone.
- He said the Magnificent Seven (M7) is actually closer to the Magnificent 700 because it encompasses hundreds of businesses.
- He said that, given that corporate structure, concerns over narrow leadership in the S&P 500 Index should be assessed differently.
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Eric Balchunas, Bloomberg Intelligence's senior exchange-traded fund analyst, said concerns that the S&P 500's rally is being driven by only a handful of large-cap technology stocks are overdone.
On Oct. 10, Balchunas said the seven major US technology companies known as the Magnificent Seven, or M7, in fact encompass hundreds of businesses.
"The Magnificent Seven is closer to the Magnificent 700," he said, arguing that large technology companies have expanded their reach by acquiring many other businesses.
Balchunas cited Microsoft and Google as examples, saying each has acquired about 270 companies.
Given that corporate structure, concerns that gains in the S&P 500 are overly concentrated in a small number of stocks may need to be viewed differently.
JH Kim
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