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After a tough 2022, tech stocks and Bitcoin are in an unusual position in 2023 - they have become a haven for investors seekingavoid risks in the banking sector. As a result, Microsoft is up 15% this year, Apple is up over 20%, and these are the key players in the sector. In addition, Bitcoin even showed almost 100% growth.
There are several reasons for this:
1. In many ways, the growth was based on positive macroeconomic data in January, which showed a steady decline in inflation;
2. The fuel for growth was the quarterly reports of Microsoft and Apple, which came out higher than expected;
3. Part of the rebound is because some tech investors took too many risks last year and they ended up being oversold;
4. And the finish line for them was provided by expectations that rates will start to decline, as the collapse of Silicon Valley Bank led to a tightening of financial conditions.
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Microsoft and Apple have been so successful, andother sectors performed so poorly that the weight of the shares of these two companies in the composite indexes S&P 500 and Nasdaq 100 rose to about 13% and 25%, respectively, which is an all-time high. This is now the real concern - narrowing the lead is rarely good for the health of the market. These are certainly solid companies with solid earnings and excellent balance sheets, but such dominance and high index weights mean that if they stumble, they will drag the entire market with them. The same thing is happening in cryptocurrencies now - almost all of the growth was solely in Bitcoin, and altcoins are hanging around their lows.
In the first half of April, such dynamics maypersist. The next expected catalysts for a change in the situation may appear on April 12 (inflation data) and towards the end of April, when Microsoft and Apple should report earnings.