On The Rock
Top Themes of the Week
Happy Juneteenth Weekend!
Many people are probably surprised to see that the S&P 500 and Nasdaq have had such a strong performance so far this year, jumping up almost 16% and a whopping 30% respectively. But when you take a closer look at the numbers, you find something interesting and a bit concerning.
You see, this impressive surge isn't because of a wide variety of companies performing exceptionally well. Instead, a few tech behemoths are carrying the lion's share of the growth. To be precise, only three stocks are responsible for about half of the entire growth seen in both indices - Apple, Microsoft, and Nvidia.
If you widen your lens to the top 10 companies driving the growth in both indices, you find that these companies account for a staggering 81-82% of the overall increase since the start of the year. Beyond these leading companies, the rest aren't faring so well. None of them have grown more than 1.6% this year, and even more concerning is that 38% of the companies in the S&P and 47% in the Nasdaq are actually down.
So, despite the rosy headlines about booming markets, the truth is, there's a lot of companies not doing so hot right now. And if our tech giants stumble or simply take a break from their steep climb, we don't have many other companies ready to pick up the slack.
This week, you should keep our eyes on two significant earnings reports coming from FedEx FDX 0.00%↑ and Accenture ACN 0.00%↑.
Alongside these, there are a handful of tech-focused events that might be of interest. These include the Figma user conference, as well as investor days dedicated to
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Amazon's HQ2 in Virginia finally opens
Amazon AMZN 0.00%↑ has officially opened its second headquarters, known as HQ2, in Arlington, Virginia, amid a period of corporate turbulence characterized by a recent layoff of 27,000+ employees. Despite the challenges, Amazon views the new headquarters not as an expansion but as a fulfillment of its commitment to efficiency. The new facility, named Metropolitan Park, spans 2.1 million square feet and includes office space, a park, and retail space to be occupied by local businesses. Designed with sustainability in mind, the campus features two 22-story buildings and has been developed to meet the needs for increased collaboration space, acknowledging the shift towards remote work prompted by the pandemic.
Amazon has reaffirmed its policy requiring employees to return to the office at least three days a week, a move that spurred protests from about 2,000 employees in May. The company plans to accommodate 8,000 employees at HQ2, all of whom have been hired locally from the surrounding regions of Washington D.C., Maryland, and Virginia.
Intel's $25 billion investment in Israel
Intel Corp INTC 0.00%↑, the U.S. chipmaker, is set to spend $25 billion to construct a new factory in Kiryat Gat, Israel, marking the most substantial international investment in the nation's history, according to Prime Minister Benjamin Netanyahu. Scheduled to open in 2027, the factory is expected to operate at least until 2035, providing employment to thousands.
As part of the deal, Intel will see an increase in its tax rate from the current 5% to 7.5%. Intel, which has maintained operations in Israel for almost five decades, is the country's largest privately held employer and exporter and holds a prominent position in the local electronics and information industry. This announcement follows Intel's 2017 acquisition of Israel-based Mobileye Global Inc., a developer of advanced driver-assistance systems, for $15 billion. Intel underscored the integral role its Israel operations have played in the company's global success, expressing its commitment to meeting future manufacturing needs.