Dot-com parallel leads to fear of what's next for this record-busting stock market

Dow Jones
Aug 11

MW Dot-com parallel leads to fear of what's next for this record-busting stock market

By Barbara Kollmeyer

The ratio of the S&P 500's tech companies to the index is back at dot-com era levels

Is a tech bubble swirling around this stock market? Not everyone agrees.

The S&P 500 SPX came within 0.01% of its 16th record close this year on Friday, while the Nasdaq COMP nailed its 18th. Futures indicate more records may be ahead for Monday as many see the path of least resistance for equities is higher. That is, until it isn't.

Howard Lindzon, co-founder and CEO of StockTwits, says there's been lots of discussion regarding all-time highs for tech stocks, bitcoin and gold, which has raised questions about whether we're in a boom, bust or a mix.

Everyone seems to be banking on the same trades - bullish on tech via the Invesco QQQ Trust Series QQQ, which tracks the Nasdaq-100 NDX, bullish on bitcoin and altcoins and gold and "get me the hell out of bonds," Lindzon said.

One important chart at the center of some boom/bust discussion that he flags is from Charlie Bilello, chief market strategist at wealth-management firm Creative Planning:

Bilello's chart shows how tech's 34% representation in the S&P 500 is now bigger than tech weighing in 2000 before the internet bubble burst.

Lindzon flags another chart though, that argues investors may be obsessing about high tech representation far too much. The BofA chart passed around by Marlin Capital's creator David Marlin shows how railroads represented 63% of the U.S. stock market in 1881, and while that proved a peak, tech dominance may be early in its ride, he says.

Ed Yardeni of Yardeni Research meanwhile told his clients the "sky may be the limit for the Magnificent-7 and the bull market they are leading," providing the economy doesn't run into trouble.

"The forward P/Es [price/earnings] of the S&P 500 with and without the Mag-7 are at 22.5 and 19.9, with the Mag-7's valuation multiple at 29.7. Stocks are not cheap. But as long as the odds of a recession remain low, these high valuation multiples are sustainable," he said.

Back to Lindzon, who says: ""It is easy to yell 'bubble' and harder to yell 'this is the beginning of a boom.'"

"I see that it took 25 years after the technology sector hit a 34 percent weighting in the S&P to get back to that same weighting," he said. And it's possible "that with mobile, cloud and AI that technology could be 70% weighting of the S&P at some point."

"I think about the massive cash, global dominance and strong balance sheets of the 10 biggest companies that have to spend it on R&D and people and raw materials to keep each other at bay and keep themselves in the same company. While it might be nicer to have 50 or 100 slightly smaller giants, 10 healthy, paranoid giants is better than two or three," said Lindzon.

The markets

U.S. stock futures (ES00) (YM00) (NQ00) are rising, with Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y easing. Gold prices (GC00) are down the most in three months, on fading expectations for a gold-bar tariff. Bitcoin (BTCUSD) is hovering near a high.

   Key asset performance                                                Last       5d      1m      YTD      1y 
   S&P 500                                                              6389.45    2.43%   2.07%   8.63%    19.56% 
   Nasdaq Composite                                                     21,450.02  3.87%   4.20%   11.08%   28.10% 
   10-year Treasury                                                     4.275      7.80    -16.40  -30.10   36.70 
   Gold                                                                 3435.8     0.21%   2.50%   30.18%   36.70% 
   Oil                                                                  63.57      -4.03%  -4.88%  -11.55%  -20.20% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Nvidia (NVDA) and Advanced Micro Devices $(AMD)$ stock are dropping after a report those companies will give 15% of their chip revenue from sales in China to the U.S. government to help secure new export licenses.

Intel $(INTC)$ CEO Lip-Bu Tan is reportedly set to meet on Monday with President Donald Trump, who called for his ousting last week.

With all eyes on Tuesday's expiration of the U.S.-China trade truce, soybean futures (S00) are jumping after Trump said he hopes China will quadruple its soybean orders in a Truth Social post.

Elsewhere, Treasury Secretary Scott Bessent told a Japanese newspaper that trade talks should wrap up by October.

Lithium prices and related stocks are up after China battery giant Contemporary Amperex Technology (CN:300750) shut one of its big mines, as Beijing tries to get control of overcapacity.

Monday is quiet on the data front, but Tuesday will bring consumer prices for July.

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The chart

William Blair's Richard de Chazal says the earnings picture is returning to normal. He plotted the progression of analyst earnings estimates this year vs. the previous two years. As the chart shows, there was a big downturn owing to tariffs, but now those forecasts are heading higher again. Earnings growth for S&P 500 companies that had been expected to 8.5% for all of 2025, back in July, is now expected to be 10.1%, he notes.

Top tickers

These were the most-active tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   PLTR    Palantir Technologies 
   AMD     Advanced Micro Devices 
   AAPL    Apple 
   PLUS    EPlus 
   GME     GameStop 
   TLRY    Tilray Brands 
   AMZN    Amazon 
   BMNR    BitMine Immersion 

Random reads

Conch blowing. A fix for your sleep issues.

AOL is getting out of the dial-up internet business it's been in for decades.

Smooth jazz. For cows.

-Barbara Kollmeyer

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

 

(END) Dow Jones Newswires

August 11, 2025 06:51 ET (10:51 GMT)

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