New fears for the stability of the Wall Street Stock Exchange. The financial newspaper Wall Street Journal yesterday raised some fears about the future of the American financial market in an article titled “The only six stocks that matter”, ie the only six stocks that count on the Nasdaq. And the six stocks mentioned in the WSJ analysis are Apple, Facebook, Google, Netflix, Amazon and Gilead Sciences. The six stocks make up more than half of the $664 billion of Nasdaq's year-to-date capital increase, and three of them (Amazon, Google and Apple) contributed 37% to Nasdaq growth.'Nasdaq index which he has recorded since the beginning of the year an increase in 7,4%.
What is the fear fueled by the WSJ? Excessive concentration of earnings in a very few stocks could lead to a decline in the indices. The ghosts of the past (late 90s and 2007), when a few stocks kept the entire market afloat, could reappear according to the Wall Street Journal, which does not rule out possible difficult moments in the near future.
The numbers recorded since the beginning of the year by the big six of the Nasdaq suggest the worst. For example, Netflix from January 2 to yesterday it has more than doubled its value, going from about 50 dollars per share at the beginning of January to 106 euros at yesterday's closing after having also exceeded the 115 dollar bar two weeks ago. Very similar speech for Amazon that has passed from $309 per share in early January to $531 of yesterday's closing, recording an increase in its value of more than 70%. Double-digit percentage increases at the beginning of the year also for Facebook (+21%), Google (+19,2%), Gilead Sciences (17,2%) and Apple (+11,1%).
It remains to be seen how much longer the rally in these stocks can continue. The WSJ explains that the exponential growth of a few stocks doesn't automatically mean that the market is drugged and that stocks will then crash. The alarm of an imminent decisive downward correction has been sounded for several years but the Nasdaq index still seems to hold despite the excessive concentration of gains. Fears of a new bubble burst, however, remain.
