Four Minutes with Jon Webster

The FANGs. The FAANGs. The Magnificent 7. American tech stocks have all but dominated headlines over the last year—with each new group generating a fresh buzz-worthy name. The latest classification of highfliers? The Fab Four—Nvidia, Amazon, Meta, Microsoft.   As we look to the next fiscal year, it’s worth taking a step back to compare performance against the hype. Stocks closed the first quarter of 2024 near all-time highs across developed markets, with the S&P 500 trading over 5200. While the popular narrative points to AI-driven stocks alone powering this performance, a closer look dispels that notion. The S&P 500 is market cap weighted—which means it puts more emphasis on the biggest names. The SPW index also tracks the constituents of S&P 500, but with equal weights. Viewed this way, the rally in stocks that followed pandemic lows relied not just on the darlings of the tech sector but on the whole market. Indeed, all sectors participated in it at one time or another.  Now,​ with valuations to future earnings stretched—the SPX 2024 Year-End – Forward PE is trading at 21.7—what will it take to keep the rally going? As investors seek new reasons to keep buying, all eyes will undoubtedly turn to earnings—and whether corporate profit growth can justify current market pricing. So far things are looking good: most U.S. companies have now reported first-quarter results, which show profit growth picking up.  —Varun Sharma, Managing Director, Exposure Management, Total Fund Management  Thanks for subscribing to CPP Investments Sign up for our latest news, insights, reports and other information about CPP Investments Email address * Please enter valid email id Job title Select Job Title Associate Analyst Consultant advisor Manager/supervisor Government official/regulator General manager/director Board director Chairman/board member VP/SVP/EVP President Partner/Owner/Entrepreneur Parent/guardian C-level other Chief Human Resources Officer Chief Marketing Officer Chief Financial Officer Chief Sustainability Officer Chief Digital Officer Chief Technology Officer Chief Operating Officer Educator/professor Student Editor/reporter Other Organization How did you hear about CPP Investments? 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