Following the U.S. stock market crash of March, Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Facebook (NASDAQ:FB), Apple (NASDAQ:MSFT) and Microsoft (NASDAQ:MSFT) combined have added $2.7 trillion to their market cap.<\/p>\n
Meanwhile, the stock markets disconnect with the real economy has gotten worse.<\/p>\n
While U.S. GDP has lost $2 trillion, the stock market has added $4 trillion to the total market cap of companies in the S&P 500.<\/p>\n
Of course, the Federal Reserves balance sheet explosion has aided the stock market rally since March.<\/p>\n
The Feds balance sheet expansion has been a common factor in the tech giants rallies since March. These tech companies, along with Tesla (NASDAQ:TSLA), have carried the stock market higher over the past four months.<\/p>\n
As the economy suffered under government lockdown orders, the big tech giants were in prime position to smash earnings expectations in Q2.<\/p>\n
Apple shares rallied more than 10% to make new all-time highs after reporting sales growth of 11% in Q2 2020 results. Last weeks rally allowed Apple to overtake Saudi Aramco as the worlds most valuable company.<\/p>\n
Amazons second-quarter saw the companys sales take off despite the coronavirus pandemic-induced slowdown. Its shares rallied post-earnings before undergoing a bit of profit booking.<\/p>\n
Meanwhile, Facebook reported revenue growth of 11% despite an ad boycott from various companies. Its shares gapped up almost 7% post-earnings before a mild selloff.<\/p>\n
Alphabet rallied 38% from the March low. After reporting an unprecedented revenue decline, its shares declined post-earnings.<\/p>\n
High expectations from Microsoft made the stock rally 25% from the March lows. After reporting spectacular earnings, the stock continued its uptrend.<\/p>\n
While Facebook, Amazon, Alphabet, Microsoft, and Apple have returned 35% in 2020, the remaining 495 stocks in the S&P 500 are in the red.<\/p>\n
These giants have carried the stock market on their shoulders; if any one of them drops abruptly, the whole market could enter a downward spiral.<\/p>\n
Because of this, analysts at Morgan Stanley have predicted a 10% selloff in the U.S. stock market.<\/p>\n
If the prediction comes true, the selloff would be reminiscent ofwhat happened to the Nifty-Fifty stocks back in the 1970s. Nifty-Fifty refers to the group of 50 stocks that led the markets toall-time highs in the early 1970s, followed by a 46% crash. <\/p>\n
While these stocks had led the rallies to the top, they also led the nosedive that followed.<\/p>\n
Back then, Forbes wrote,<\/p>\n
The Nifty-Fifty were taken out and shot one by one.<\/p>\n
Could the same happen to the tech giants driving the market rally in 2020?<\/p>\n
Disclaimer: This article represents the authors opinion and should not be considered investment or trading advice from CCN.com. Unless otherwise noted, the author holds no investment position in the above-mentioned securities.<\/p>\n
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Nifty-Fifty All Over Again? Why Investors Should Fear Big Tech Rally - CCN.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Following the U.S. Continue reading