While many have called the S&P 500's concentration a key risk to the bull market, it's also been a major reason why US stocks have soared. Large-cap tech earnings have widely outperformed results from the other 493 companies in the S&P 500, supporting the investor bias toward America's largest tech names.
Meanwhile, the S&P 500's current high valuation, which sits at a 21.5 forward 12-month price-to-earnings ratio, per FactSet, is well above the five-year average of 19.7 and the 10-year average of 18.2. At 21.5, the S&P 500's valuation has only been higher than this level during the 2021 post-pandemic boom and the dot-com bubble.
Several Wall Street strategists have pointed out that the index's increasing slant to large technology companies supports the elevated valuation levels.
"Today's market, 50% of it is asset-light growth companies, tech, healthcare, higher-margin industries," Bank of America Securities head of US equity and quantitive strategy Savita Subramanian told Yahoo Finance in December. "Whereas back in the 80s, 70% of it was manufacturing. So I think the exercise of comparing tod
Jan 17 (Reuters) - Bank of America (BAC.N)
, opens new tab is set to award stock to most of its global employees for the eighth time since 2017, following a robust performance by the second-largest U.S. lender in 2024, according to an internal memo seen by Reuters on Friday.
The stock awards, which will be issued in addition to year-end incentive awards, would be granted to employees earning an annual total compensation of up to $500,000, covering about 97% of the lender's global workforce.
BofA had 213,193 staff at the end of 2024, which means the stock awards will amount to slightly over $1 billion.
Earlier this week, BofA's fourth-quarter profit beat expectations, boosted by trading activity. The lender also predicted it would earn higher interest income for 2025.
For the full year of 2024, the banking giant's revenue surpassed $100 billion, driven by strong growth in fee income, and its profit came in at $27.1 billion.
"Every source of revenue increased, and we saw better than industry growth in deposits and loans," BofA CEO Brian Moynihan said in an earnings release. "We believe this broad momentum sets up 2025 very well."
Wall Street CEOs also voiced confidence that the incoming U.S. administration would maintain a business-friendly environment beneficial to banks. This comes as the country's top lenders report a surge in profits, driven by an uptick in dealmaking and trading activities.
Bankers expect global deal volumes to surpass $4 trillion in 2025, the highest level in four years.
SX70LBdzbZZW57FrwlWCAv74XWqlE870WpiqEwWtRSDu6o
The Topix Index rose 0.7% to 2,729.11 while the Nikkei gained 0.6% to 39,154.11 right after open, as investors sought clarity on whether the new US administration will take a moderate approach trade policy.
“If he refrains from tariffs on day one, that could suggest he may raise tariffs gradually through dialog rather than slapping tariffs unilaterally,” said Hideyuki Ishiguro, chief strategist at Nomura Asset Management.
The gains were led by carmaker shares, which have been badly hit by tariff worries, other exporters and firms that have big exposure to the Chinese economy such as machine makers and consumer stocks.
Toyota Motor Corp. contributed the most to the Topix Index gain, increasing 2.4%.
Ishiguro said the lack of new tariffs from Trump would also reduce concerns about US inflation and help Japanese automakers and others in export sectors.
Still, uncertainties around Trump’s policy are keeping investors on edge, likely making it harder for Japan’s equity benchmarks to break out of their recent trading range. Since October, the Nikkei has been mostly stuck in a 38,000-40,000 range.
Trump ordered his administration to address unfair trade practices globally and investigate whether Beijing had complied with a deal signed during his first term.
Although Trump did say he would impose tariffs and tax foreign countries in his speech, the moves were “taken as an indication towards gradualism”, said Taylor Nugent, senior economist at National Australia Bank in Sydney.