Analyst: Insufficient breadth in US stock market rally is not a new issue; behind the 'Magnificent Seven' are actually hundreds of companies.

October 9 — Bloomberg ETF analyst Eric Balchunas posted that concerns about the lack of breadth in U.S. stock market gains have been repeatedly raised recently, but this phenomenon does not necessarily mean investors need to worry. Citing market data from the past 100 years, he said that only about 4% of stocks have created all of the net wealth increase in the U.S. stock market, while about half of companies have underperformed U.S. Treasuries over the long term, indicating that stock market returns have long been highly concentrated in a small number of companies.

Balchunas further pointed out that the large technology companies currently driving U.S. stocks higher are different from large enterprises in the traditional sense, as they have consolidated vast business systems through numerous mergers and acquisitions. For example, Microsoft and Google have each acquired about 270 companies. Therefore, he believes investors should not understand their market influence only from the name of a single listed company, but should view the "Magnificent Seven" (Mag 7) as a business system composed of hundreds of companies behind them, jokingly calling it "Mag 700."

He also mentioned that if Google's YouTube were listed independently, by his estimate it could rank among the top 20 in the S&P 500 by market capitalization. The business scale and influence of these companies far exceed a single corporate entity, which may explain why, even though current U.S. stock index gains are concentrated in a few large technology stocks, there is still broad corporate asset and business support behind them.