Should it continue to be called the S&P 500 Index or be renamed as the S&P 5 Index? Apple, Microsoft, Amazon, Facebook, and Google (Alphabet) dominate the index performance as you can read in this week’s Weekly Market Review. These five giants are so big, their specific performance sways the over-all performance of the 500 company index in a dramatic way. Certainly, how these five giants do is very economically important.
The index was designed to be a concise and simple way to measure how well, or not well, large publicly traded American businesses were doing. So is it providing that accurate measurement? Many would argue not as well as it used to because it is so top-heavy with the giants named above. 2020 served as a good example; these five did so well that they carried the S&P 500 index performance to a positive 16.26% return while 198 of the 500 companies actually saw their stock price decline in 2020. If you didn’t stop to consider that nearly 40% of the S&P saw price declines, you might blindly consider it a great year for the 500 companies across the board. To better understand the S&P5 500 Index follow this LINK to a chart courtesy of Slickcharts.
If you are a car manufacturer producing or striving towards production of electrical vehicles, the recently soaring gasoline prices may be your sales and marketing. This recent ARTICLE from Car and Driver outlines car companies big goals towards the transition to electric vehicles.
As always, we hope you find the Weekly Market Review both informative and interesting.
Have a great week!
Trevor N. Coe, CFP®