Mega-Cap Stock Concentration Risks Loom Large Ahead of Big Tech Earnings
• Earnings reports this week putting focus on risks of outsize weighting of "Magnificent Seven" mega-cap stocks in indexes like S&P 500 • These 7 stocks accounted for bulk of S&P 500's gains in 2022; their huge influence can drag down broader indexes if they falter • Magnificent Seven now represent nearly 29% of S&P 500, close to highest ever weighting, presenting challenges for active managers • With narrow market leadership, active managers struggle to match performance of cap-weighted indexes they benchmark against • Upcoming earnings reports from Apple, Amazon, and Meta could bring more volatility amid worries over concentration in these mega-cap names