“We see a small group of tech winners leading stock gains as a feature of the artificial intelligence (AI) theme — not a flaw,” Jean Boivin, head of the BlackRock Investment Institute, wrote in a research note on Monday. “We stay overweight U.S. stocks.”
As of Monday’s close, Apple (AAPL), Alphabet (GOOG, GOOGL), Microsoft (MSFT), Amazon (AMZN), Meta (META), and Broadcom (AVGO) had also contributed more than a quarter of the major index’s gains.
One potential concern is that the market could be at risk if a few large tech companies that have driven a lion’s share of the gains stop surprising to the upside.
However, research from Morgan Stanley’s chief investment officer, Mike Wilson, shows this might not be an issue.
Wilson found roughly 20% of the top 500 stocks are outperforming the broader index over a rolling one-month period. This is the lowest percentage of companies outperforming in Wilson’s dataset dating back to 1965.
Wilson’s work noted that after similar narrow breadth readings where less than 35% of companies are outperforming the index on a one-month basis, the S&P 500 rose about 4% on average over the next six months.
“Narrow breadth can persist but it’s not necessarily a headwind to forward returns in and of itself,” Wilson said. “We believe broadening is likely to be limited to high-quality/large-cap pockets for now.”
Wilson argued that when considering the impact of high interest rates on corporations, this makes sense. Investors have flooded large-market-cap stocks that have held up well in the higher rate environment and are seeing earnings grow more than their smaller peers.
And a slew of recent upgrades to year-end S&P 500 targets reflect similar sentiment. Three Wall Street firms cited tech outperformance as part of the reason the index is doing better than they initially thought this year.
MONTREAL – Lightspeed Commerce Inc. says it is conducting a review of its business and operations including talks relating to a range of potential strategic alternatives.
The Montreal-based payments technology company made the comments after reports concerning a potential transaction involving the company.
Lightspeed says it periodically undertakes a review of its business and operations with a view of realizing its full potential.
A strategic review is often seen by investors as a prelude to a sale by a company.
Lightspeed says its board of directors is committed to acting in the best interests of the company and its stakeholders.
Company founder Dax Dasilva returned to the role of chief executive officer earlier this year and has been working to return the company to profitability.
This report by The Canadian Press was first published Sept. 26, 2024.
MONTREAL – National Bank of Canada says it has cleared a key regulatory hurdle in its proposed acquisition of Canadian Western Bank.
The Montreal-based bank says it has received the Competition Bureau’s clearance for the deal.
The transaction still requires approval by the Office of the Superintendent of Financial Institutions and the minister of finance.
Canadian Western shareholders voted to approve the deal earlier this month.
National Bank announced an all-stock deal to buy Canadian Western earlier this year in a proposal that valued the Edmonton-based bank at about $5 billion.
It has said its acquisition of Canadian Western will significantly expand its western footprint and create a stronger national competitor.
This report by The Canadian Press was first published Sept. 26, 2024.
The mattress retailer says the approval from the Ontario Superior Court of Justice comes after Sleep Country shareholders earlier this month voted 99.93 per cent in favour of the deal.
CEO Stewart Schaefer told investors after the vote he was pleased they approved the agreement, which he says will unlock shareholder value.
The $1.7-billion deal will see Fairfax acquire all issued and outstanding common shares of Sleep Country for $35 per share.
Sleep Country says the deal is expected to close on or about Oct. 1, subject to customary closing conditions.
Once the deal is completed, Sleep Country will apply to delist from the Toronto Stock Exchange.
This report by The Canadian Press was first published Sept. 26, 2024.
