34% of the S&P 500's Value Comes From Just 8 Stocks

Market Performance - Every stock in the Fateful Eight except Microsoft outperformed the S&P 500 in 2024, with the other seven at least doubling the gains of the broader market [1] - 168 stocks in the S&P 500 are down for the year, and more than 70% of the names in the index have underperformed it [1] - The S&P 500 has gained roughly 26% in 2024, with a 55% increase over the last two years [13] Concentration in the S&P 500 - More than one-third of the S&P 500's value comes from just eight companies [2] - The Fateful Eight now make up roughly 34.4% of the market, with their weights in the S&P 500 as follows: Apple (7.66%), Microsoft (6.37%), Nvidia (6.71%), Amazon (4.16%), Meta Platforms (2.57%), Tesla (2.48%), Alphabet (2.24%), and Broadcom (2.24%) [7][9][13] Equal-Weight Funds - Equal-weight S&P 500 funds have vastly underperformed standard S&P 500 funds this year but would be more resilient if the Fateful Eight experience a pullback [10] - Equal-weight funds rebalance their holdings quarterly to ensure each company accounts for the same share of the total, not based on market cap [10] Market Dynamics - High-flying tech and artificial intelligence stocks have surged in price, offsetting hundreds of underperformers in the S&P 500 [13] - The market's gains may eventually broaden, with the rest of the S&P 500 stocks potentially appreciating if the lofty valuations on the Fateful Eight normalize [6] - Big tech names are viewed as defensive plays in an economic environment featuring more inflation and fewer interest rate cuts [6] Company Performance - The Fateful Eight, including Apple, Microsoft, Nvidia, Amazon, Meta Platforms, Tesla, Alphabet, and Broadcom, have shown extraordinary performances this year [13] - Broadcom's market cap recently surged past the $1 trillion mark, leading to its inclusion in the Fateful Eight [13]