
"Nvidia's market cap is now larger than every country's entire listed stock exchange apart from the US, China, Japan and India," the trio wrote. That has a distorting effect on U.S. stocks because Nvidia and just four other stocks ( Microsoft, Alphabet, Apple, and Amazon) compose 30% of the S&P 500's entire value. For comparison, the concentration of the top five companies in the S&P during the dot com bubble of 2000 was less than half that."
"The valuation of those stocks is so high that the U.S. market now dwarfs foreign markets in a way that it historically did not. "The US is now nearly five times larger than China (in second) and around 20 times larger than Europe's larger markets," they said. "This doesn't automatically mean it's a bubble, but we appear to be in uncharted territory, and likely means performance heavily depends on a handful of companies," the Deutsche team said."
U.S. stocks slipped, with the S&P 500 down 0.69% and Nvidia falling 1.95%. Long-term bond yields rose as investor confidence in government financing weakened. Outsized valuations among a few tech giants have produced extreme concentration in the S&P 500, with Nvidia plus Microsoft, Alphabet, Apple and Amazon comprising about 30% of the index. Nvidia's market capitalization exceeds nearly every country's listed exchange except the largest four. The U.S. equity market now far outscales major foreign markets, raising concern that overall performance may hinge on a handful of companies and posing bubble risk unique to the U.S.
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