Wall Street’s tech and AI stocks rebounded from last week’s sell-off, driving the S&P 500 and Nasdaq Composite up by 1.2% and 2.1% respectively.
The Dow Jones Industrial Average rose 0.6% to a new record high of 52,183 points.
This was after Google’s parent company Alphabet was added to the Dow for the first time, which sent its shares 5% higher.
Essentially, the tech giant will experience higher demand as ETFs (exchange traded funds) and other investment funds that track the performance of the Dow index will have to buy its shares, which will boost its share price.
There are only 30 stocks in the Dow index, which also includes stocks like Amazon, Apple, Microsoft, Nike, Disney, JP Morgan and McDonald’s.
So the admission of Alphabet means one company was kicked out of the index.
And that company was American telco giant Verizon, which saw a meagre 2% increase to its share price over the past 12 months.
Alphabet, on the other hand, jumped 98% over the past year, mainly driven to investors’ insatiable demand shares of tech giants investing heavily in artificial intelligence infrastructure.
The AI trade, arguably, is showing signs of excessive speculation, which my colleague Ian Verrender has written an insightful column about. I’ll have more to say about that shortly!
