Ten Stocks Are Driving Almost All of the S&P 500′s Earnings

By Marc Chandler, Global Head of Currency Strategy, Brown Brothers Harriman

This Great Graphic was on Barry Ritholtz’s Big Picture blog. It originally was from Morgan Stanley’s Adam Parker. It notes that nearly 90% of this year’s earnings growth of the S&P 500 companies can be traced to 2% or 10 companies.

There seems to be two industries represented and Big Oil is not one of them. It is finance with 6 of the top 10, but if you allow the inclusion of GE (due to GE Finance), finance accounts for 70%. Technology is the other industry, led by Apple, IBM and Western Digital.

It is even more concentrated than the chart suggests. Four companies–three financial services (AIG, Goldman and Bank of America) and one technology firm (Apple) provided over half of the earnings growth of the S&P 500.

 

Marc Chandler

Marc Chandler

Marc Chandler has been covering the global capital markets in one fashion or another for nearly 25 years, working at economic consulting firms and global investment banks. Chandler attended North Central College for undergraduate. He holds masters degrees from Northern Illinois University and University of Pittsburgh in American History and International Political Economy. Currently Chandler teaches at New York University Center for Global Affairss, where he is an associate professor.

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Comments

  1. It’s even more concentrated than appears in financial services sector. In one instance the U.S Government has been the principal owner of the equity (AIG). The two others (Goldman, Bank of America) are primary government securities dealers whose profits are largely obtained through Federal Reserve operations.

  2. If this very narrow earnings growth is not a major red flag warning about US equities, then I don’t know what is. It is earnings growth that drives the growth in equity prices. If these four companies were to slow down, then what sector is positioned to take their place as the earnings growth leaders?

  3. Apart from as a point of interest is this a problem? It is growth not level after all…how unusual is this – my feeling is that a broad based expansion over any one year is unusual, not the concentration?