Led by the software companies, the NASDAQ fell about 1.5%. A narrative is beginning to emerge that AI will begin to replace software. Is this a realistic concern? Bloomberg writes that of the software companies that have released results, 67% have exceeded expectations. That compares with 83% for the overall tech sector. Will this narrative die like so many others or is it something of significance?
Because of the decline in software companies, the S & P 500 also fell but the decline was relatively modest…about 0.85%. Bloomberg writes most companies the S & P 500 rose on a continued rotation in names other than tech.
Reiterating comments from several days ago, 10 stocks in the S & P 500 now account for roughly 40% of the index’s total market capitalization. According to Bloomberg, from 1880-20210, the top 10 average about 18% of the index.
Writing it differently, if one invests in an S & P 500 index fund, roughly $40,000 goes into just 10 companies concentrated in just one sector. The remaining gets spread across the other 490 companies in 10 sectors.
The markets have never been this imbalanced or concentrated in history. One can conclude that it is all about chasing returns. The 5-year annual return on the Dow Jones Conservative portfolio is 0.96%. The 10 year is return is 2.87%. The 5-year annual return for the S & P 500 is 14.42%. A moderately conservative Dow Jones Portfolio five-year annual return is 2.95%.
The Treasury market was quiet yesterday, but precious metals had a modest rebound with gold and silver up around 5%. Bit Coin fell to the lowest level since 2024 and is down more than 15% for the year. It is down almost 41% since its October 2025 peak.
Oil rebounded as Iranian gun boats attempted to stop an American oil tanker and Iran attempted to “drone” the aircraft carrier Abrahm Lincoln.
What will happen today? Friday’s BLS labor report was delayed because of the government shutdown. GOOG post results at the close of today and AMZN tomorrow.
Last night the foreign markets were up. London was up 1.17%, Paris up 0.92% and Frankfurt down 0.34%. China was up 0.85%, Japan down 0.78% and Hang Seng up 0.05%.
Futures are flat. Gold is again over $5,000 ounce and Bit Coin has stabilized. The 10-year is off 1/32 to yield 4.27%.
