The FANGs. The FAANGs. The Magnificent 7. American tech stocks have all but dominated headlines over the last year—with each new group generating a fresh buzz-worthy name. The latest classification of highfliers? The Fab Four—Nvidia, Amazon, Meta, Microsoft.
As we look to the next fiscal year, it’s worth taking a step back to compare performance against the hype. Stocks closed the first quarter of 2024 near all-time highs across developed markets, with the S&P 500 trading over 5200. While the popular narrative points to AI-driven stocks alone powering this performance, a closer look dispels that notion. The S&P 500 is market cap weighted—which means it puts more emphasis on the biggest names. The SPW index also tracks the constituents of S&P 500, but with equal weights. Viewed this way, the rally in stocks that followed pandemic lows relied not just on the darlings of the tech sector but on the whole market. Indeed, all sectors participated in it at one time or another.
Now, with valuations to future earnings stretched—the SPX 2024 Year-End – Forward PE is trading at 21.7—what will it take to keep the rally going? As investors seek new reasons to keep buying, all eyes will undoubtedly turn to earnings—and whether corporate profit growth can justify current market pricing. So far things are looking good: most U.S. companies have now reported first-quarter results, which show profit growth picking up.
—Varun Sharma, Managing Director, Exposure Management, Total Fund Management
Institute Dialogue: Priti Singh and Diana Scott
CPP Investments’ Senior Managing Director and Global Head of Capital Markets & Factor Investing discusses the current discourse around
The Factor Lens
Investors are used to walking a tightrope of risk. But the current landscape of heightened geopolitical conflict, climate change and
Younger women are closing the gender gap in managerial roles in the U.S.
In the U.S., women in the early stages of their careers account for a larger share of managerial roles than ever before.