Market Overview

Why The Dow Jones Industrial Average Owes Apple And Microsoft A Big Thanks

Why The Dow Jones Industrial Average Owes Apple And Microsoft A Big Thanks

The Dow Jones Industrial Average is poised to end 2019 on a very high note, in part due to the contribution from heavyweights like Apple Inc. (NASDAQ: AAPL) and Microsoft Corporation (NASDAQ: MSFT).

'No Signs' Of Slowing Down

The Dow would be 1,100 points lower from current levels if Apple and Microsoft weren't part of the index. Throughout 2019, Apple added more than $430 billion to its market cap and Microsoft added nearly $370 billion, CNBC's Mike Santoli pointed out on Monday afternoon.

Looking forward to 2020, there's reason to believe both tech giants will continue rallying according to Ari Wald, head of technical analysis at Oppenheimer. In Apple's case, the stock chart shows a break above its 2018 peak with "no signs of topping out."

Microsoft's stock "paused" for most of the third quarter, but broke above its prior highs to flirt with the $150 level. Shares should also inch higher amid a broader recovery in the SaaS sector.

Once In A 500 Year Opportunity

Michael Bapis, managing director at Rockefeller Capital Management, said on CNBC both Apple and Microsoft are beneficiaries of a much broader environment. The technology sector is undergoing a 30-year to 50-year period of growth -- the likes of which we'll "never see in the next 500 years."

Apple and Microsoft are not only leading the technology sector but the overall market, and both companies have an encouraging earnings and margin growth trajectory.

"I would go with both of them with the momentum," Bapis said. "They are getting a little expensive relative to earnings, but I think their growth will be outpacing that expensiveness over the next 12 to 18 months."

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