To say that 2024 is one for the record books is probably an understatement. The Fed has battled persistent inflation, Americans have felt pain at the grocery store, a Presidential candidate dropped out, and a red wave swept the nation in the recent election. Despite all of this, the S&P 500 is up a whopping 25.70% this year through November 8, 2024 (Source: YCharts).
Many of you might be thinking to yourselves that this year felt good, but not great. Why is that? Perhaps it is because the rally in the market has not been broad-based. In fact, it has been quite narrow.
Before delving into the numbers, let’s get a quick refresher on how the S&P 500 index is built
The S&P 500 index is a market-cap weighted index. What is market-cap weighted index?
This means that the largest companies by market capitalization (market capitalization = number of outstanding shares X price) have the biggest impact (both good and bad) on the overall performance of the index. If a really large company does well (think traditional companies like Microsoft, Amazon, and Apple), then the index does well also. This is exactly the case this year.
The Top 10 stocks in the S&P 500 have accounted for the lion’s share of the index’s overall performance
Who are these companies? Well, here they are, including the percentage of the index they make up, as well as their year-to-date (YTD) performance (also through November 8, 2024):
| Company | YTD Return (11/8/24) | S&P 500 Weight (%) | Performance Contribution |
| Nvidia (NVDA) | 198.20% | 7.25% | 14.37% |
| Apple (AAPL) | 18.46% | 6.83% | 1.26% |
| Microsoft (MSFT) | 12.97% | 6.26% | 0.81% |
| Amazon (AMZN) | 37.01% | 3.88% | 1.44% |
| Meta (META) | 67.04% | 2.56% | 1.72% |
| Google (GOOGL) | 27.94% | 1.73% | 0.58% |
| Google (GOOG) | 27.94% | 1.73% | 0.48% |
| Broadcom (AVGO) | 66.26% | 1.69% | 0.50% |
| Berkshire Hathaway (BRK.B) | 29.93% | 1.67% | 1.12% |
| Tesla (TSLA) | 29.27% | 1.63% | 0.48% |
| YTD Performance of Top 10 | 22.76% |
Anything stand out? Exactly!
The number one company in the S&P index is Nvidia
This chip maker has been all the rage, thanks to (perhaps unreasonable) near-term expectations for the evolution of Artificial Intelligence (AI). Nvidia’s stock is up an amazing 198.2% YTD. Thanks to such stratospheric performance, Nvidia alone makes up 7.25% of the entire S&P 500!
Further, due to such a performance run, Nvidia accounts for almost 56% of the YTD performance of the S&P 500 at its current weight! You read that right! 56%! When you factor in the performance of the rest of the Top 10, the weighted-average performance of 22.76% accounts for almost 89% (88.55%) of the S&P 500’s YTD performance! This essentially means that the other 490 stocks in the S&P 500 account for the other 2.94% return YTD! How crazy is that?
If you are an individual stock picker, it’s been a tough year
If you didn’t have a crystal ball that forecasted such outsized returns for a few stocks, you were left out. Interestingly, most of the positive YTD performance for Tesla came AFTER the election last Tuesday. Coincidence? I think not.
Fortunately, Bright Road Wealth Management remains committed to low-cost, passive investments that capture the return of the market. Even though it’s been a weird year, we’re happy our clients have benefitted from the returns. We appreciate you entrusting us with your long-term financial well-being.
If you’re not yet a Bright Road Wealth client and would like support with investing, please contact us for a free consultation.
All data is sourced from YCharts, and is believed to be accurate. Past performance is no guarantee of future performance. This is for informational use only and should not be used for making investment decisions. Bright Road Wealth Management LLC is a fee-only Registered Investment Advisory firm regulated by the Securities and Exchange Commission (SEC).
