Big stocks are dominating like never before

Google parent Alphabet has become the latest tech trillionaire, following in the footsteps of Apple and Microsoft. Last year, the latter two advanced 86 and 55 per cent respectively – astonishing gains for companies of their size, but reflecting the fact that bigger has been better in an increasingly concentrated rally led by large-cap stocks. The top five S&P 500 stocks (Amazon and Facebook make up the list) now account for 17.3 per cent of the index, notes Bespoke Investment – the highest weighting in history. Is this sustainable? Maybe. The current weighting is unprecedented, but the equivalent spike higher during the technology bubble in 1999 was much more severe. Still, the big five are increasingly dominating markets; as Bank of America notes, that points to "rising correlation and concentration risks".