S&P 500 & Nasdaq Analysis and Trends

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Big US Stocks’ Q4’23 Fundamentals
By: Adam Hamilton | March 8, 2024

The big US stocks dominating markets and investors’ portfolios are soaring. They recently wrapped up another quarterly earnings season, reporting some spectacular results. Yet these huge market-darling companies are still extremely overvalued, deep into dangerous bubble territory. Their incredible mounting euphoria fueled by some parabolic gains can’t last either. So serious imminent downside risks abound.

As a lifelong student of the markets, I love earnings seasons! Publicly-traded companies are required to submit comprehensive 10-Q quarterly and 10-K annual reports to the SEC, which are chock full of their latest and best-available hard fundamental data. That illuminates how companies are really faring, cutting through the obscuring fogs of sentiment normally driving stock-price action. This perspective is invaluable.

While 10-Qs have 40-day deadlines after quarter-ends, the way-larger and more-in-depth 10-Ks aren’t required until 60 days out. So just last week Q4 earnings season ended, with the stragglers among the big US stocks publishing their official reports. Last quarter the flagship S&P 500 stock index surged a hefty 11.2% higher to 4,770, leaving all of 2023 with massive 24.2% gains! Were those fundamentally justified?

Traders either think so or don’t care. So far in 2024, frenzied stock buying has intensified driving the SPX another 7.7% higher at best! In late January it achieved its first record close in 24.5 months, which really supercharged popular greed. That fueled the SPX powering even higher since, attaining 15 record closes in just 30 trading days as of early March! Excited investors have rushed in chasing these fat stock gains.

All that left the S&P 500 and many of its dominant component stocks seriously overbought. A week ago the SPX stretched 13.5% above its baseline 200-day moving average! With US stock markets greedy and euphoric, way overbought, and super-overvalued, a major-selloff reckoning is inevitable and looming. Trading at these extremes simultaneously, stock prices need to normalize soon to reflect their underlying fundamentals.

As always big US stocks’ latest Q4’23 results are important for gaming stock markets’ likely direction in coming months. For 26 quarters in a row now, I’ve analyzed how the 25 largest US companies that dominate the SPX fared in their latest earnings seasons. These behemoths commanded a stunning near-record 45.6% of the SPX’s total market cap exiting Q4! Their latest-reported key results are detailed in this table.

Each big US company’s stock symbol is preceded by its ranking change within the S&P 500 over the past year since the end of Q4’22. These symbols are followed by their stocks’ Q4’23 quarter-end weightings in the SPX, along with their enormous market capitalizations then. Market caps’ year-over-year changes are shown, revealing how those stocks performed for investors independent of manipulative stock buybacks.

Those have been off the charts for years, long fueled by the Fed’s previous zero-interest-rate policy and trillions of dollars of bond monetizations. Stock buybacks are deceptive financial engineering undertaken to artificially boost stock prices and earnings per share, maximizing executives’ huge compensation. Looking at market-cap changes rather than stock-price ones neutralizes some of buybacks’ distorting effects.

Next comes each of these big US stocks’ quarterly revenues, hard earnings under Generally Accepted Accounting Principles, stock buybacks, trailing-twelve-month price-to-earnings ratios, dividends paid, and operating cash flows generated in Q4’23 followed by their year-over-year changes. Fields are left blank if companies hadn’t reported that particular data as of mid-week, or if it doesn’t exist like negative P/E ratios.

Percentage changes are excluded if they aren’t meaningful, primarily when data shifted from positive to negative or vice-versa. These latest quarterly results are very important for American stock investors, including anyone with retirement accounts, to understand. They illuminate whether US stock markets are fundamentally sound enough to keep powering higher or are threatened with a major correction or bear selloff.



While the SPX includes 500 stocks, lately only the largest Magnificent 7 mega-cap technology ones really matter. Exiting Q4, mighty Apple, Microsoft, Alphabet, Amazon, NVIDIA, Meta Platforms, and Tesla commanded an astounding 28.4% of the entire SPX’s market capitalization! That equaled this benchmark’s bottom 398 components’ collective weightings. These Mag7 giants exert absolute dominance over stock markets.

In 2023, the Mag7’s total market caps skyrocketed 74.4% to $12,095b! That more than tripled the entire SPX’s 24.2% surge! That vast outperformance has left the US stock markets stunningly bifurcated, with nearly all their gains driven by the Mag7. That has forced professional fund managers to increasingly chase mega-cap-tech upside with outsized allocations, or risk their funds’ performances lagging their peers’.

Underperform too long in the money-management business, and investors will pull their capital which can quickly strangle and even kill funds. So more and more investment has flooded into the Mag7, amplifying their enormous gains. All day long on CNBC, Wall Street fund managers and analysts argue that this concentrated mega-cap-tech focus is righteous. The big US stocks’ latest Q4 results sure buttressed that case...

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