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The S&P 500 index is trading around record highs after just four stocks drove nearly half of its gains in February, according to BofA Global Research. 

“U.S. equities outperformed other asset classes including bonds” last month, said BofA equity and quantitative strategists in a research note dated March 2. “But breadth was still narrow.” 

Megacap tech companies Nvidia Corp.
NVDA,
+3.60%
,
Meta Platforms Inc.
META,
-0.82%
,
Amazon.com Inc.
AMZN,
-0.36%

and Microsoft Corp.
MSFT,
-0.14%

contributed 45% of the S&P 500’s total return last month of 5.3%, according to the note. Still, all of the index’s sectors rose in February, led by “cyclicals” including consumer discretionary, industrials and materials, the strategists found.

“Despite new S&P highs, sentiment is not yet euphoric,” they said. 

The S&P 500
SPX
ended Friday at 5,137.08, kicking off March with a fresh all-time peak that marked its 15th record close this year, according to Dow Jones Market Data.

Read: S&P 500 scores gains last seen in 1971 as AI hopes fuel ‘second’ leg of rally

While the index’s technology and communication-services sectors also outperformed last month, they were “lower in the line-up after being the top two sectors in January,” the BofA strategists said. 

The S&P 500’s tech sector saw a total return of 6.3% in February, while communication services gained 5.7% on a total-return basis, FactSet data show. 

So-called Big Tech stocks — including Nvidia, Meta, Amazon, Microsoft, Apple Inc.
AAPL,
-2.54%
,
Google parent Alphabet Inc.
GOOGL,
-2.76%

GOOG,
-2.81%

and Tesla Inc.
TSLA,
-7.16%

— span across the S&P 500’s tech, communication-services and consumer-discretionary sectors and have an outsized weight in the index. 

Shares of chip maker Nvidia, which has a market value of around $2 trillion, surged in February as the company continued to ride the wave of optimism surrounding artificial intelligence.

The chip maker’s stock was trading 5.1% higher on Monday afternoon, extending its rally after jumping 28.6% last month, according to FactSet data, at last check. 

Nvidia contributed 1.1% to the S&P 500’s return in February, the most of the four stocks that accounted for 45% of the index’s gains last month, the BofA note shows.

“Just 26% of stocks outperformed the index” in February, which is “similar to recent months,” the BofA strategists said. The S&P 500 has climbed around 7.7% so far this year based on Monday afternoon trading levels, FactSet data show, at last check.

Meanwhile, BofA Global Research has raised its year-end target for the S&P 500 to 5,400 points, from 5,000, according to a separate note from the bank dated March 3.

The U.S. stock market was trading mostly lower on Monday afternoon, but the S&P 500 was about flat at around 5,137, according to FactSet data, at last check. The Dow Jones Industrial Average
DJIA
was off 0.1%, while the tech-heavy Nasdaq Composite
COMP
retreated 0.2%.

The S&P 500 was struggling to rise in early afternoon trading Monday as yields in the Treasury bond market rose. 

The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was up about four basis points at around 4.22% on Monday afternoon, FactSet data show, at last check. Bond yields and prices move in opposite directions.


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