US Quarterly Chartbook_ Combination of valuation expansion and earnings growth drives S&P 500 to 22% YTD return

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the performance of the S&P 500 index and its contributing sectors as of September 30, 2024, highlighting significant trends in the market and projections for 2025 sales and earnings growth. Core Insights - S&P 500 Performance: The S&P 500 achieved a total return of 22% year-to-date (YTD) and 6% in the third quarter (3Q), reaching an all-time high of 5762. Major contributors to this performance included large-cap stocks such as Microsoft (MSFT), NVIDIA (NVDA), Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), and Meta (META), which collectively accounted for 44% of the index's return [2][3][4]. - Earnings Expectations: The YTD return was driven by rising earnings expectations (+959 basis points), an 11% expansion in the forward price-to-earnings (P/E) multiple to 22x (+1,122 basis points), and dividends contributing +127 basis points [2]. - Sector Performance: The Utilities sector led with a +31% return, while the Energy sector lagged with only +8% [2][4]. - AI Infrastructure Trade: The performance of AI infrastructure stocks slowed in 3Q, with a basket of AI stocks rising only 4% compared to 15% in the first half of the year [2]. Sales and Earnings Growth Projections for 2025 - Fastest Sales Growth: Companies projected to have the fastest sales growth in 2025 include NVIDIA (97%), Micron Technology (82%), and Advanced Micro Devices (AMD) [3][17]. - Fastest EPS Growth: The companies expected to show the highest earnings per share (EPS) growth include Micron Technology, Uber, Gilead, AMD, and NVIDIA [3][18]. - Largest S&P 500 Stocks: The largest stocks by equity capitalization in the S&P 500 are Apple, Microsoft, NVIDIA, Amazon, and Alphabet [3]. Notable Performers - Best YTD Performers: Notable stocks with the best YTD performance include Vistra Corp (+210%), NVIDIA (+145%), and Constellation Energy (+124%) [15]. - Worst YTD Performers: Companies with the worst performance include Walgreens Boots Alliance (-64%), Intel (-53%), and Dollar Tree (-50%) [15]. Valuation Insights - Lowest Valuation Stocks: The stocks with the lowest valuation based on P/E and EV/EBITDA metrics include Warner Bros. Discovery, APA, and Devon Energy [3]. - Market Capitalization: The report provides insights into the market capitalization of various sectors, indicating a significant shift over time [4]. Additional Considerations - Investment Decisions: Investors are advised to consider this report as one of several factors in their investment decisions, emphasizing the importance of comprehensive analysis [4]. This summary encapsulates the key points from the conference call, providing a detailed overview of the S&P 500's performance, sector contributions, and projections for future growth.