{"id":1471646,"date":"2024-06-17T19:05:00","date_gmt":"2024-06-17T23:05:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1471646"},"modified":"2024-06-17T19:05:00","modified_gmt":"2024-06-17T23:05:00","slug":"5-stocks-account-for-60-of-the-sps-ytd-return-charting-the-sp-5-vs-the-sp-495","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/5-stocks-account-for-60-of-the-sps-ytd-return-charting-the-sp-5-vs-the-sp-495\/1471646\/","title":{"rendered":"5 Stocks Account For 60% Of The S&P’s YTD Return: Charting The S&P 5 vs The S&P 495"},"content":{"rendered":"

5 Stocks Account For 60% Of The S&P’s YTD Return: Charting The S&P 5 vs The S&P 495<\/span><\/p>\n

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Nvidia (NVDA) accounts for 34% of the 14% SPX year-to-date gain, <\/strong>and five stocks have accounted for 60% of the S&P 500 total YTD return; <\/strong> <\/strong>MSFT, NVDA, GOOGL, AMZN, and META have collectively surged by 45% and now comprise 25% of the S&P 500 equity cap.<\/strong><\/p>\n

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A key reason for this unprecedented outperformance is that these five companies posted Q1 EPS growth of 84% YoY vs 5% for the typical S&P 500 stock. <\/strong>Furthermore, strong results for the past four quarters have prompted analysts to raise their 2024 EPS forecasts by 38% for these five Tech stocks. In contrast, the profit forecast for the other 495 stocks in the index have been reduced by 5%. <\/strong><\/p>\n

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That said, while consensus 2024 forecasts imply a 31% gap between EPS growth for these five stocks and the median S&P 500 firm (37% vs. 6%) the gap is expected to narrow to 8% in 2025 and only 4% in 2026.<\/p>\n

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The performance gap between the SPX cap-weighted and equal-weight indices over the last two years is the widest in nearly 24 years. In fact, the equal-weighted index is now unchanged since the start of 2022.<\/p>\n

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The consequences are clear: breadth is catastrophic, and according to Morgan Stanley, one month breadth just hit a new low, with the percentage of stocks outperforming the S&P reaching the lowest level on record.<\/strong><\/p>\n

<\/a><\/strong><\/p>\n

That has not stopped the cap-weighted SPX to officially be back in “overbought” territory with RSI at 75 <\/strong>but only 49% of S&P companies are above their 50dma.<\/p>\n

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Within the broader S&P, the six mega-caps with $1+ trillion market caps are up an average of ~11.5% in Q2. <\/strong>The remaining 490+ stocks in the index are down an average of ~3% in Q2. <\/strong><\/p>\n

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AAPL was up 8% last week, adding $260B in market cap this week alone after a flood of stock buybacks, a burst of retail buying…<\/p>\n

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… and a gamma squeeze,<\/strong> all of which combined to help the (formerly) world’s biggest company soar nearly 30% from its year-to-date lows as Tim Cook was hell-bent to reverse the narrative after dismal initial reception to the “Apple Intelligence” WWDC day<\/a>.<\/p>\n

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Bloomberg’s John Authers <\/a>asks:<\/p>\n

‘Can this last’?<\/strong><\/h2>\n

The question rings louder with every record the market breaks. Momentum tends to carry on for a long time until something stops it, but it\u2019s very rare for such a rally to persist as long as this one.<\/strong> <\/em><\/p>\n

The one snag with momentum strategies is that when they reverse, they can do so in a very serious way.<\/strong> There hasn\u2019t been a momentum crash for a while; the closest approach came when tech stocks sold off on April 19 after results from Netflix that were better than official forecasts but disappointed the market. <\/em><\/p>\n

This was nothing compared to sharp moves in response to dovish signals from inflation data or from the Federal Reserve earlier in this cycle. <\/em><\/p>\n

The biggest momentum reversal this decade came on the day in November 2020 when the results of Covid-19 vaccine tests convinced investors that the worst of the pandemic could be over much earlier than thought.<\/em><\/strong><\/p>\n

The reshuffle in the stock market was spectacular.<\/p>\n

The Problem With Momentum – When it reverses, it can do so in a big way<\/em><\/strong><\/p>\n

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Source: Bloomberg<\/em><\/p>\n

With the same winners winning day after day, largely on growing enthusiasm rather than their results, it does make sense to fear a big reverse at some point,<\/strong> or indeed a bubble.<\/p>\n

It\u2019s perhaps even more concerning that the force driving the winners on is mostly valuations; it\u2019s not about any great momentum in growing earnings, even though several companies have very much shown it.<\/p>\n

The S&P 500 Momentum index\u2019s earnings multiple tripled after plumbing its lowest point in over a decade only last May.<\/p>\n

Over that period, its multiple growth has far outstripped that of the Magnificent Seven \u2014 although it\u2019s obvious that the AI craze has a stake in this:<\/strong><\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

As one veteran trader remarked (while we note he admits participating tactically in this farce):<\/p>\n

“This won’t end well…”<\/strong><\/em><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nMon, 06\/17\/2024 – 15:05<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/5-stocks-account-60-sps-return-charting-sp-5-vs-sp-495<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

5 Stocks Account For 60% Of The S&P’s YTD Return: Charting The S&P 5 vs The S&P 495 Nvidia (NVDA) accounts for 34% of the…<\/p>\n","protected":false},"author":0,"featured_media":1471647,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1471646","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1471646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1471646"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1471646\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1471647"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1471646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1471646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1471646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}