CORRECTED - S&P 500 tech index edges towards $5 trillion while Apple steals spotlight

By Rodrigo Campos and Noel Randewich

NEW YORK/SAN FRANCISCO (Reuters) - While some investors have been waiting for Apple's market capitalisation to reach $1 trillion, those looking for big round numbers might be better off looking to the S&P 500 technology index as a whole, which is approaching the $5 trillion mark.

The S&P 500 technology index <.SPLRCT>, which includes Apple Inc , will hit $5 trillion in about two months if its growth of 16 percent so far in 2017 continues at the same pace.

Apple is already the world's most valuable publicly traded company, and its weight within the S&P 500 in recent decades has been rivaled only by Exxon Mobil and Microsoft .

The iPhone maker's market capitalisation recently reached a record $774 billion after increasing 27 percent so far in 2017. If Apple continues to grow at that rate, its market capitalisation will hit $1 trillion in October.

"Investors see the big numbers, the hoopla surrounding hitting one of these arbitrary levels..." said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. "Hitting those milestones often attracts more investors," she added.

Apple accounted for as much as 4.9 percent of the S&P 500 in September 2012, but its share of the index has since slipped to 3.8 percent.

In comparison, Exxon Mobil accounted for 5.3 percent of the S&P 500 in December 2008, while Microsoft briefly accounted for 4.9 percent of the index in 2000.

Apple recently accounted for 15.1 percent of the S&P 500 technology index, down from a peak of 21.8 percent in 2012.

The technology index recently traded at 17.4 times expected earnings, down a little from a month ago but otherwise near highs not seen since 2008, according to Thomson Reuters Datastream.

Shares of Apple edged down 0.3 percent on Wednesday after the company reported its March-quarter results on Tuesday and said sales of iPhones fell, surprising investors.

Still, at least four analysts raised their share price target for Apple.

While global smartphone sales have lost steam in recent years, investors remain optimistic that Apple will mark the 10th anniversary of the iPhone with new models that give a major boost to sales.

The median analyst 12-month price target for Apple on Wednesday was $160. Hitting that target implies a 9 percent rise from current levels, which would put Apple's market capitalisation at $836 billion, excluding the effect of potential stock buybacks.

Still, analyst price targets are a poor predictor of stock performance, and a stock's past performance often says little about what it will do in the future.

In February, Warren Buffett told CNBC that Apple was likely to hit a $1 trillion market value before his own holding company, Berkshire Hathaway , which has a market value of $410 billion after its stock rose 2 percent so far in 2017.

Steep stock gains driven by optimism about upcoming iPhones are unlikely to continue at the same pace, said Shebly Seyrafi, analyst at FBN Securities. But he recommends the stock and even increased his own price target to $160 from $155 following Apple's quarterly report.

"It's a value play that should be bought at current levels," Seyrafi said.

(Corrects second paragraph to say $5 trillion, not $5 billion)

(Reporting by Rodrigo Campos and Noel Randewich)