S&P 500 & Nasdaq Analysis and Trends

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Big US Stocks’ Q1’24 Fundamentals
By: Adam Hamilton | May 10, 2024

The big US stocks dominating markets and investors’ portfolios continue to thrive. They are finishing up another earnings season covering a record-breaking quarter, reporting some fantastic results. Still these fat underlying profits are growing far slower than major companies’ soaring stock prices. That has forced valuations deeper into dangerous bubble territory, fueling mounting risks for awakening a new bear market.

Prevailing stock prices are mostly driven by herd psychology, popular greed and fear. That often masks how companies are actually faring fundamentally. But those obscuring sentiment fogs are dispelled once a quarter when new results are released. Companies listed on US stock exchanges have 40-calendar-day deadlines after quarter-ends to file these reports with the US Securities and Exchange Commission.

These comprehensive quarterlies include full financial statements, and management’s discussion and analysis on them. MD&As are often more valuable than financials, illuminating material developments and sharing strategies to achieve future growth. These essential quarterly reports offer the best-available fundamental data on individual stocks, yielding excellent insights into how companies are likely to perform.

By the look of the stock markets, big US stocks must be crushing it. In Q1’24 the flagship S&P 500 stock index dominated by these elite companies blasted 10.2% higher in a powerful one-sided advance. While the SPX achieved fully 22 new record closes last quarter, those relentless gains stretched it to extremely-overbought levels. By late March the S&P 500 had soared 14.1% above its baseline 200-day moving average!

Q1’s strong surge naturally fueled serious greed and euphoria, a warning sign flagging major toppings. Couple hyper-bullish popular sentiment with extreme overboughtness and bubble valuations, and stock investors ought to be wary. That includes all Americans with retirement accounts, which are heavily invested in big US stocks! With the SPX mostly grinding lower since Q1 ended, the reckoning may be underway.

As always big US stocks’ latest Q1’24 results are important for gaming stock markets’ likely direction in coming months. For 27 quarters in a row now, I’ve analyzed how the 25 largest US companies that dominate the SPX fared in their latest earnings seasons. Exiting Q1, these behemoths commanded a stunning record 46.8% of the SPX’s total market cap! 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 Q1’23. These symbols are followed by their stocks’ Q1’24 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 Q1’24 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. Collectively these latest quarterly results from the leading US companies shed light on crucial questions. Are the US stock markets still fundamentally-sound enough to keep rallying on balance, or are they threatened with a major selloff? If the latter, is it likely to be a correction or new bear market?



The US stock markets have grown increasingly top-heavy, which is a serious risk. Exiting Q1, the SPX’s 25 largest component stocks again represented 46.8% of its entire weighting! Dramatically soaring since the 34.8% in Q3’17 when I launched this deep quarterly research thread, that extreme concentration is troubling. The fewer stocks any bull market depends on to drive it, the more fragile and precarious it is.

These US stock markets are heavily reliant on the beloved Magnificent 7 mega-cap technology stocks. Together mighty Microsoft, Apple, NVIDIA, Alphabet, Amazon, Meta Platforms, and Tesla now account for a staggering 29.1% of the SPX’s total market cap! The Mag7’s gargantuan total $13,587b exceeded the total of the SPX’s bottom 403 components. These market darlings essentially are the US stock markets.

Their outperformance remains dramatic, with the Mag7’s market cap skyrocketing 50.6% over the year ending Q1’24! That almost doubled the entire S&P 500’s 27.9% gain, which means the vast majority of its other 493 stocks seriously underperformed. While these mega-cap-tech giants are fantastic American companies with amazing fundamentals, their stocks are still exceedingly overvalued as we will soon discuss...

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