Together, the CEOs of Apple and Microsoft oversee 13.41% of the S&P 500 market capitalization. This is a record amount of influence and the highest since August 2020, when the two stocks had a capitalization market totaling 13.17% of the S&P 500, according to Strategas technical analyst Todd Sohn. Sohn conducted a study of index weightings dating back 40 years and found no other pair of powerful stocks with so much weight. Sohn says there are positives and negatives that come with the two largest US stocks having such a high concentration in the main index. “As long as they say it loud, they are going to help keep the index afloat. If they get hit, if that ever happens, it will be up to energy, industrials and materials companies to help. to keep the index afloat,” he said. “It’s concentrating the risks.” “If I’m a passive investor, $13 of every $100 I invest in the S&P goes into those two stocks,” Sohn said. “If you’re active, you say that’s why you need to search for other names…and find where the value is.” Microsoft makes up about 6.06% of the S&P’s market capitalization and Apple 7.35%, he said. Apple CEO Tim Cook runs America’s largest company, with a market capitalization of $2.78 trillion. Microsoft CEO Satya Nadella leads the second-largest US company, with a market capitalization of $2.19 trillion. In addition to being part of the S&P 500, both stocks are also part of the Dow 30 and the Nasdaq. “If I’m a passive investor, $13 of every $100 I invest in the S&P goes into those two stocks,” Sohn said. Peter Boockvar, chief investment officer at Bleakley Advisory Group, said investors are returning to the strategy of putting money to work in fewer stocks. “People feel safe in big names,” he said. “It’s the perceived defensive game. The theme we’ve seen is that a lot of money is piling into a few stocks, and those stocks are so important that they alone are driving the main index.” Boockvar said the theme of concentration in mega-cap tech has been around for years. Big tech was hit hard in the market sell-off, but Apple is down well below the roughly 13.2% year-to-date drop in the S&P tech sector. “It’s amazing that Apple is back near record highs,” Boockvar said. “We’re at an interesting time with Microsoft just at its 200-day moving average, and coincidentally the S&P is almost there too. The 200 days on the S&P and Microsoft are almost identical.” The 200-day moving average is simply an average of the last 200 closing prices of a stock or index. A close above the moving average is considered a positive signal for more gains, but when a stock falls below the 200-day mark, it is a sign of negative momentum. Microsoft closed Monday at $293.47, just in its 200 days at $293.61. The S&P 500 ended Monday at 4,297, just below the 200-day moving average at 4,327. Apple closed at $173.19, well above its 200-day low of $159.55. Apple is approaching its high of $182.94. Microsoft is up 14.3% since June 30 and is still down 12.7% year to date. Apple is up 26.7% since June 30 and down 2.5% since the start of the year. The S&P 500 is down 9.8% year-to-date, but up 13.5% since June 30. Twenty years ago it was General Electric and Cisco, and 30 years ago it was GE and Microsoft, with just over 5% of market capitalization.