The N factor

Excluding NVIDIA from the S&P 500 reveals that European stocks have performed on par with their U.S. counterparts since the start of the current bull market in October 2022. As the old saying goes, "If you torture the numbers enough, they’ll eventually give in." This graph’s narrative, however, hinges on the careful choice of starting date and the evolution of the EUR/USD exchange rate. That said, with NVDIA now representing 6.5% of the US index, we must acknowledge NVIDIA's significant contribution to the overall performance of the U.S. market.

This raises an important point: the dominance of the U.S. stock market might rely disproportionately on a handful—or perhaps just one—key stock. It’s time to look beyond the "Magnificent 7."