Category Archives: market cap

The Biggest S&P 500 Firms Grow Bigger

Eight firms have consistently ranked in the Top 10 by market capitalization within the S&P 500 (Index: SPX) during 2020, growing from representing one-fifth of the index' total market cap to nearly one quarter during the first seven months of 2020.

The eight firms are Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), Facebook (NASDAQ: FB), Berkshire Hathaway (NYSE: BRK.B), Alphabet (Class A) (NASDAQ: GOOGL), Alphabet (Class C) (NASDAQ: GOOG), and Johnson & Johnson (NYSE: JNJ).

We've developed an interactive chart to show how they've grown at roughly three month intervals, spanning from early January 2020 through the end of July 2020.

At these snapshots, the overall market capitalization of the entire S&P 500 index has gone from $27.5 trillion in January 2020, down to $22.8 trillion in mid-April 2020, before rebounding to nearly $26.8 trillion at the end of July 2020. Firms in July whose component weighting within the S&P 500 index is greater than 3.7% are trillion dollar companies.

That exclusive club includes just three firms: Apple, Microsoft, and Amazon. Even adding the value of Alphabet's Class A and Class C shares together isn't quite enough to pull the company that is still better known as Google into the trillion dollar valuation club.

That may just be a matter of time. Welcome to the age of the megacaps!

References

Slickcharts. S&P 500 Companies by Weight. [Online Data]. Snapshots: 8 January 2020, 17 April 2020, 31 July 2020.

Who’s On Top In The S&P 500 Before And After The Coronavirus?

We periodically take snapshots of the S&P 500's total market capitalization, including the index' Top 10 component firms by market cap weighting. We were curious to see how the Coronavirus Recession has affected who's on top in the S&P 500, so we created the following animated chart to visualize how the index' and its top 10 firms' market capitalization has changed from the time before first coronavirus case in the U.S. was documented and the present.

Animation: Major Components of S&P 500 Index by Market Cap, 8 January 2020 and 16 April 2020

The earlier snapshot is from 8 January 2020, 13 days before the first U.S. coronavirus case was reported in the state of Washington, while the later snapshot was taken on 16 April 2020.

It's a little surprising, but eight of the firms whose market cap weightings placed them in the index' Top Ten back on 8 January 2020 are still in the Top Ten. Here is that list, ranked by their market caps as of 16 April 2020:

  • Microsoft (NASDAQ: MSFT)
  • Apple (NASDAQ: AAPL)
  • Amazon (NASDAQ: AMZN)
  • Facebook (NASDAQ: FB)
  • Johnson & Johnson (NYSE: JNJ)
  • Alphabet (Class C) (NASDAQ: GOOG)
  • Alphabet (Class A) (NASDAQ: GOOGL)
  • Berkshire Hathaway (Class B) (NYSE: BRK.B)

The following two firms dropped out of the S&P 500's Top Ten during the last three months, JP Morgan Chase (NYSE: JPM), which went from #6 to #12 overall, and Visa (NYSE: V), which dropped from #10 to #11.

Two firms have replaced them in the Top 10 of the S&P 500 by market cap weighting. Proctor & Gamble (NYSE: PG) went from #11 to #9, and UnitedHealth Group (NYSE: UNH) went from #15 to #10.

Between 8 January 2020 and 16 April 2020, the total market cap of the S&P 500 has shrunk by 17%, from $27.5 trillion to $22.8 trillion. Many of the firms in the Top 10 have seen their relative share within the index increase because their market caps haven't shrunk by as much as others have declined during the Coronavirus Recession. The two exceptions in the Top Ten are Microsoft, whose contract win over Amazon to provide cloud computing services to the U.S. Department of Defense was upheld last week, and Amazon, whose market share for selling consumer goods has greatly benefited from the various coronavirus-related business closures and stay-at-home orders that state and local government officials have implemented across much of the U.S.

S&P 500 Market Capitalization

As of the end of 2019, the total market capitalization of the S&P 500 was $26,759,686,786,884. Or if you prefer, approximately $26.76 trillion!

S&P 500 Market Capitalization, 1988-Q1 through 2019-Q4

That's 14.8 times the value of the S&P 500's market capitalization at the end of 1988-Q1, when the index' market cap stood at $1.81 trillion. From 1988-Q1 to 2019-Q4, the S&P 500's total market capitalization has doubled three times, completing its first doubling period in 7 years from 1988-Q1 to 1995-Q1, taking another 2.5 years to double again by 1997-Q3, and then another 16 years to double a third time in 2013-Q3.

Measured a little differently, the market cap of the S&P 500 as a percentage of the U.S. Gross Domestic Product at the end of 2019-Q3, the most recent quarter for which we have a somewhat finalized estimate, was 114.7%. That's close to the highest the S&P 500's total market cap has been since the days of the Dot-Com Bubble, when that figure peaked at 126.8% in the first quarter of 2000.

S&P 500 Market Capitalization as Percentage of U.S. GDP, 1988-Q1 through 2019-Q3

We won't know until the end of March 2020 how the S&P 500's market cap compares to the size of the U.S. economy through the end of 2019, when the estimate for the United States' GDP in 2019-Q4 is somewhat finalized.

References

Silverblatt, Howard. Standard & Poor Index Earnings and Estimates. [Excel Spreadsheet]. 16 January 2020. Accessed 23 January 2020.

U.S. Bureau of Economic Analysis. GDP and Personal Income Interactive Data. National Income and Product Accounts. Table 1.1.5. Gross Domestic Product. [Online Database]. Accessed 23 January 2020.

U.S. New Home Market Continues Deceleration

It is increasingly looking like the market for new homes in the U.S. peaked in August 2018. That's bad news for homebuilders (Indices: ITB, PKB, XHB) and for the U.S. economy.

The following animated chart shows both the nominal and inflation-adjusted trailing twelve month average for the market capitalization of new homes sold in the United States from December 1975 through the preliminary data reported for October 2018. In it, we can see that the trailing year average market cap for U.S. new homes sales peaked in July 2018 at $20.32 billion in nominal terms, or $20.61 billion in terms of constant October 2018 U.S. dollars. The animation will show each chart for five seconds - if you're accessing this article on a site that republishes our RSS news feed and cannot see the animation, please follow the links to the individual nominal and inflation-adjusted charts.

Animation: Trailing Twelve Month Average New Home Sales Market Capitalization, Not Adjusted for Inflation [Current U.S. Dollars] and Adjusted for Inflation [Constant October 2018 U.S. Dollars], December 1975 - October 2018

That deceleration in the months since August 2018 has been significant. So much so that we've opted to also present the nominal and inflation-adjusted year-over-year growth rates of the U.S. new home sales market cap's trailing year average since January 2000, where we discover that we would have to go back to the March and April 2006 to find a similarly slow rate of market cap growth for new homes being sold in the U.S.

Year Over Year Growth Rate of Nominal and Inflation-Adjusted Trailing Twelve Month Average of New Homes Market Capitalization, December 1975 - October 2018

Once again, if you want to see the charts individually, please follow the links for the nominal growth rate chart or the inflation-adjusted version.

This kind of data may go a long way to explaining why the Fed's new chair has suddenly become rather dovish regarding the Fed's plans for setting the level of interest rates in the U.S., where sales in California's very high-priced markets appear to have been particularly hard hit by the Fed's recent series of rate hikes.

Data Sources

U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [Excel Spreadsheet]. Accessed 28 November 2018.

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 228 November 2018.

U.S. Department of Labor Bureau of Labor Statistics. Consumer Price Index, All Urban Consumers - (CPI-U), U.S. City Average, All Items, 1982-84=100. [Text Document]. Accessed 14 November 2018.

U.S. New Home Market Continues Deceleration

It is increasingly looking like the market for new homes in the U.S. peaked in August 2018. That's bad news for homebuilders (Indices: ITB, PKB, XHB) and for the U.S. economy.

The following animated chart shows both the nominal and inflation-adjusted trailing twelve month average for the market capitalization of new homes sold in the United States from December 1975 through the preliminary data reported for October 2018. In it, we can see that the trailing year average market cap for U.S. new homes sales peaked in July 2018 at $20.32 billion in nominal terms, or $20.61 billion in terms of constant October 2018 U.S. dollars. The animation will show each chart for five seconds - if you're accessing this article on a site that republishes our RSS news feed and cannot see the animation, please follow the links to the individual nominal and inflation-adjusted charts.

Animation: Trailing Twelve Month Average New Home Sales Market Capitalization, Not Adjusted for Inflation [Current U.S. Dollars] and Adjusted for Inflation [Constant October 2018 U.S. Dollars], December 1975 - October 2018

That deceleration in the months since August 2018 has been significant. So much so that we've opted to also present the nominal and inflation-adjusted year-over-year growth rates of the U.S. new home sales market cap's trailing year average since January 2000, where we discover that we would have to go back to the March and April 2006 to find a similarly slow rate of market cap growth for new homes being sold in the U.S.

Year Over Year Growth Rate of Nominal and Inflation-Adjusted Trailing Twelve Month Average of New Homes Market Capitalization, December 1975 - October 2018

Once again, if you want to see the charts individually, please follow the links for the nominal growth rate chart or the inflation-adjusted version.

This kind of data may go a long way to explaining why the Fed's new chair has suddenly become rather dovish regarding the Fed's plans for setting the level of interest rates in the U.S., where sales in California's very high-priced markets appear to have been particularly hard hit by the Fed's recent series of rate hikes.

Data Sources

U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [Excel Spreadsheet]. Accessed 28 November 2018.

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 228 November 2018.

U.S. Department of Labor Bureau of Labor Statistics. Consumer Price Index, All Urban Consumers - (CPI-U), U.S. City Average, All Items, 1982-84=100. [Text Document]. Accessed 14 November 2018.