Feb 7, 2020 - Economy & Business

The 5 biggest U.S. stocks account for almost 18% of the S&P 500's market value

Illustration: Lazaro Gamio/Axios

The five biggest U.S. stocks — Apple, Microsoft, Alphabet, Amazon and Facebook — have grown so explosively that they account for nearly 18% of the S&P 500 index by market value, AP reports.

Why it matters: Never before have five companies held such powerful sway over the index, according to Morgan Stanley strategists.

The history: The last time five stocks controlled this much of the S&P 500 was during the tech bubble at the turn of the millennium.

  • That bubble eventually popped, and stocks like Cisco and GE shrank to become smaller players. Microsoft was also among them, but it has since climbed back to the top.

One difference between this time and the dot-com bubble is that many analysts don't see prices as grossly over-inflated now.

  • Each of today's Big Five is producing strong growth even when the global economy has been stuck in a sluggish pace for years.

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Microsoft again top U.S. company as market cap hits $1.435T

Data: FactSet; Chart: Axios Visuals

Microsoft again became the most valuable U.S. company on Monday as its stock rose to another record high. Microsoft regained the designation after more than three months in second place, trailing Apple.

Details: The company's stock rose 2.6% to boost its market capitalization to $1.435 trillion. The last time Microsoft was the most valuable U.S. company at the market's close was Oct. 30. Prior to that, Microsoft was the most valuable for 127-straight sessions, from April 18 through Oct. 17, according to MarketWatch. Year to date, Microsoft's stock has jumped by 19.7%.

Go deeper: The 5 biggest U.S. stocks account for almost 18% of the S&P 500's market value

Earnings on pace for a strong rebound

Data: FactSet; Chart: Axios Visuals

Thanks to a cadre of better-than-expected earnings results from the companies that have reported their fourth-quarter earnings so far, the earnings growth rate for the S&P 500 has risen to 0.7%.

Why it matters: That is a far cry from the estimated earnings decline of -1.7% at the end of the quarter. If it holds, this would mark the first time the index has reported year-over-year growth in earnings since Q4 2018. 

S&P 500 earnings continue to improve

With more than half of the companies on the S&P 500 having reported earnings, the consensus estimate for fourth-quarter earnings is down just 0.1% from three weeks ago. That's well above the 1.3% average decline for the past five years, excluding 2018, which was boosted significantly by the Tax Cuts and Jobs Act.

By the numbers: So far, 22% of S&P companies have revised first-quarter profit targets higher, the highest percentage since Q2 2018 and third-highest since 2012, Bloomberg data show.