This year has seen some mega-cap stocks, such as Nvidia, Broadcom, and Eli Lilly, soar to new highs, far outperforming the overall S&P 500 index. The rapid increase in stock prices has led to concerns on Wall Street about the health of the current stock market environment. According to Bespoke Investment Group, stocks like Broadcom, Eli Lilly, Nvidia, Microsoft, and Apple are now considered “extremely overbought,” with prices significantly above their 50-day moving averages.
Broadcom has seen a particularly sharp rise, with its stock jumping 36% in June alone, leaving it 34% above its 50-day moving average. The semiconductor maker now has a market capitalization of over $846 billion, making it the eighth largest company in the S&P 500. After reporting strong fiscal second-quarter results and announcing a 10-for-1 stock split, Broadcom saw its stock surge 12% last Thursday.
Eli Lilly, a pharmaceutical developer known for medications like Mounjaro and Zepbound, has also seen a significant increase in demand for its products, leading to a 53% increase in its stock price this year. This has pushed the company’s market value to over $842 billion, making it the ninth largest company in the S&P 500. To meet growing demand, Lilly recently announced a $5.3 billion investment in a manufacturing plant in Indiana.
Other stocks that have been deemed “extremely overbought” include Nvidia, Apple, and Microsoft, which have all traded well above their 50-day moving averages. Nvidia, in particular, saw a 3.5% increase during Tuesday’s trading session, surpassing Microsoft as the most valuable public company. This comes after previously overtaking Apple in value earlier this month.
As these mega-cap stocks continue to climb to record highs, some experts are warning that a correction may be on the horizon. The rapid and steep rise in stock prices has raised concerns about the overall health and balance of the stock market. Time will tell whether these stocks will be able to maintain their momentum or if a pullback is imminent.
Article Source
https://www.cnbc.com/2024/06/19/nvidia-and-other-megacaps-could-be-due-for-a-near-term-pullback-.html
