Analysts Say Insufficient Breadth of U.S. Stock Market Rally is a Long-Term Phenomenon, Hundreds of Companies Behind the Seven Giants

On October 9, Bloomberg ETF analyst Eric Balchunas stated that concerns about the insufficient breadth of the U.S. stock market rally are not new. He cited data from the past 100 years indicating that about 4% of stocks have generated all net wealth increases in the U.S. stock market, and approximately half of companies have underperformed U.S. Treasuries over the long term, showing that stock market returns are highly concentrated among a few firms. Balchunas believes that the large tech companies currently driving the U.S. stock market rally are different from traditional large enterprises; they have integrated vast business systems through mergers and acquisitions, with Microsoft and Google each acquiring around 270 companies. He suggested that investors should view the "Magnificent Seven" (Mag 7) as a commercial system composed of hundreds of companies, even referring to it as "Mag 700." He also mentioned that if YouTube, under Google, were to go public independently, it could rank among the top 20 by market capitalization in the S&P 500 index. The scale and influence of these companies' operations transcend individual corporate entities, explaining why the rise in U.S. stock indices is concentrated in a few large tech stocks, while still supported by a broad base of corporate assets and operations.

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