From "the dominance of giants" to "blooming in multiple points," how far can the rebound of the US stock market go?

Behind the new high in the U.S. stock market this week, tech giants are not the only contributors, with more sectors also making rare contributions to the rise. Analysts believe this may indicate that there is still room for upward movement throughout the summer. Looking back at market trends, at the beginning of the year, the U.S. stock market experienced a sharp decline due to concerns about tariff friction, with tech giants leading the market lower. But as concerns about economic recession eased and trade expectations improved, market panic quickly subsided, and tech stocks rebounded strongly. Now, this rebound is no longer limited to the tech sector, but has spread to more industries such as finance, industrials, and utilities. Multiple indicators show that market participation is expanding. Firstly, the number of stocks in the S&P 500 index that closed above the 50-day moving average this week returned to levels seen in the fall of last year, which was when the Trump victory sparked the year-end rally, indicating a strengthening technical picture. Secondly, an indicator measuring the ratio of rising stocks to falling stocks hit a new high this Friday, indicating broader market participation. Investors are starting to bet on more industries, not just tech giants Wall Street generally believes that the improvement in market breadth is a signal of a healthy stock market that can sustain its upward trend. The chief technical strategist at LPL Financial pointed out, "We have seen this script before, where the big tech stocks rally first and then lead the entire market up. It seems like this pattern is repeating itself this time." However, whether this trend can continue depends on several key uncertainties in the second half of the year, such as the risk of Middle East geopolitical conflict, the path of the Federal Reserve's interest rate cuts, and the final tariff policy of the Trump administration. Analysts at Sevens Report also caution that as long as the overall environment remains stable, this market is far from exhausted. FOMO trading drives strength in non-tech sectors As tech stocks rebound, their valuations are also soaring. Last week, some large tech stocks now have forward price-to-earnings ratios exceeding 30 times, compared to the S&P 500 average of around 22 times. Another factor driving the spread of market breadth is that some investors fear missing out on the rally ("FOMO trading"). With tech stock valuations skyrocketing, many funds are shifting to industries and sectors that were previously overlooked, seeking out "value stocks" and new opportunities. Not only retail investors, but some professional investors are also strategically diversifying their portfolios. For example, Jamie Cox, a managing partner at Harris Financial Group, did not significantly increase his holdings in tech stocks during their pullback over the past few months, but instead focused on building his long-term portfolio in defense, finance, and international blue-chip stocks. He said, "I was a bit surprised that it took so long for this rally to come, but now it finally started making money." He also noted that in recent months, more and more clients have been approaching him to make their investment portfolios more diversified and reduce their dependence on a single industry. Analysts also caution that while more industries are starting to catch up, the dominant position of tech giants is difficult to shake in the short term. Optimistic expectations for AI remain the core theme that investors are most concerned about, supporting the high valuations of the entire tech sector. Small-cap stocks are still lagging behind, but confidence is expected to return It is worth noting that this rebound has not spread to all corners of the market. Small-cap stocks are still underperforming major indices. George Pearkes, macro strategist at Bespoke Investment Group, analyzed that a clear shift in investors' risk preferences is needed to boost small-cap stocks. However, there are also optimistic views. Eric Teal, investment director at CenTrust Wealth Management, is increasing his exposure to mid-cap, small-cap, and even micro-cap stocks, especially in local banking stocks. He believes that these banks are less affected by tariff policies, and the potential rate cuts by the Federal Reserve will reduce financing costs, benefiting small companies expansion. He emphasized, "The broadening of market breadth is not a short-term phenomenon." This article is a reprint from "Wall Street News," by Fang Jiayao; edited by GMTEight: Yan Wencai.