SUPERNEWS

Macro

S&P 500 Shakeup: Top Companies' Unprecedented Moves

By Athena Xu

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1/9, 21:14 EST
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Advance Auto Parts Inc.
The AES Corporation
Albemarle Corporation
Advanced Micro Devices, Inc.
Boeing Company
Blackstone Inc.
Carnival Corporation
Salesforce, Inc.
Dollar General Corporation
DISH Network Corporation
Enphase Energy, Inc.
Expedia Group, Inc.
Fair Isaac Corporation
FMC Corporation
FIRST REPUBLIC BANK
Hilton Worldwide Holdings Inc.
Intel Corporation
Intuit Inc.
Live Nation Entertainment, Inc.
Meta Platforms, Inc.
Moderna, Inc.
Netflix, Inc.
NVIDIA Corporation
QUALCOMM Incorporated
D/B/A Royal Caribbean Cruises Ltd.
Signature Bank
SolarEdge Technologies, Inc.
SVB Financial Group

Key Takeaway

The S&P 500 saw significant movement within its top 50 companies, with average rank changes at a 10-year high and Nvidia Corp. notably rising into the top five. Meanwhile, cruise operators like Royal Caribbean made substantial gains, while renewable energy firms faced steep declines amid interest rate hikes.

S&P 500 Rankings Volatility

  • The 50 most valuable companies in the S&P 500 moved up or down an average of nine places this year, tied for the most since at least 2013.
  • Median valuation gap between each company in the top 50 has more than doubled to $7 billion since 2013.
  • Concentration risk at the very top means investors are increasingly reliant on a shrinking number of companies for returns.

Trillion-Dollar Club Dominance

  • The five largest companies now make up nearly a quarter of the S&P 500.
  • In contrast, in 2013, that number was only worth as much as the bottom 294.

Top Performers and Laggards

Top Performers:

  • Nvidia Corp. rose to finish among the top five with its valuation growing by about $829 billion thanks to AI-fueled demand for its graphics processors.
  • Meta Platforms Inc.’s valuation also boomed, recovering its losses from last year to grow by $582 billion.

Most Improved:

  • Royal Caribbean Cruises Ltd. rebounded from its pandemic crisis to rise by passing Warner Bros. Discovery Inc. and Delta Air Lines Inc., gaining spots in rankings.

Worst Performers:

  • Enphase Energy Inc., valued at more than $36 billion at the start of this year, lost almost half of its market value and fell significantly in rankings due to interest rate hikes curbing spending on solar energy projects.

Changes Among S&P Members

Ranking Changes:

  • More firms declined in ranking than improved while ten had no change; nearly half changed less than twenty places.

New Additions:

  • Fair Isaac Corp., behind FICO credit scores, saw significant share price rise after joining index in March; Blackstone Inc. sits within top fifty among new additions this year despite joining later during September rebalance.

Replacements and Delistings:

  • Fifteen stocks were replaced including SVB Financial Group, Signature Bank and First Republic Bank which were delisted after going bust during March’s banking crisis; eleven relegated firms still trading have shed a cumulative $33 billion in valuation with SolarEdge Technologies Inc., Advanced Auto Parts Inc. and DISH Network Corp accounting for two-thirds of that loss.

STREET VIEWS

  • Todd Sohn, ETF Strategist at Strategas Securities LLC:

    “This is what happens when your best players put up the most points. They do what they’re supposed to do and then you gotta make sure the bench — the rest of the index — is holding up their end of the bargain, otherwise, that’s when you get real big problems.”

  • Wes Crill, Senior Investment Director at Dimensional Fund Advisors:

    “Once a company is in the top 10 largest US stocks, it delivers at or even slightly below market returns in subsequent periods.”