The aggregate market cap of the Standard and Poor’s 500 (S&P 500) index companies declined 10.9% from $40.7 trillion to $36.3 trillion between 31 January 2022 and 31 January 2023. The communication services sector registered the most market loss over the period, followed by consumer discretionary* and information technology, according to GlobalData, a leading data and analytics company.
Murthy Grandhi, Analyst at GlobalData, comments: “Over the period, the S&P 500 index posted a 9.7% decline in annual return. On a positive note, it has rebounded 14% from its lowest level on 12 October 2022. Companies ranked in the top 10 stocks—Apple, Microsoft, Alphabet, Amazon, Berkshire Hathaway, Tesla, NVIDIA, Exxon Mobil, Visa, and UnitedHealth—accounted for 26.5% of the S&P 500’s aggregate market cap.”
The aggregate market cap of the information technology sector eroded by $1.9 trillion to $9.4 trillion. It was followed by communication services with $3 trillion and consumer discretionary with $3.9 trillion.
The real estate sector reported a loss of 9.4% in its market cap, reaching around $1 trillion. Some of the top and worst performers included VICI Properties (96.3% growth), Iron Mountain (19.3% growth), Boston Properties (33.4% loss), and Essex Property (32.4% loss).
According to GlobalData’s report, “Global Mergers and Acquisitions (M&A) Deals in 2022 – Top Themes by Sector – Thematic Research,” the tech sector continued to dominate M&A deal activity in 2022, with 11,048 deals worth $841 billion, or almost a third of the total deal value of $2.8 trillion in 2022. Furthermore, the global M&A market in 2022 witnessed deals worth $2.8 trillion, a drop of 29% compared to $3.9 trillion deal value in 2021.
In terms of market value percentage growth, energy companies outpaced others, having seen 33.8% growth over the period, and reached a market cap of $1.8 trillion. Energy constituents growing more than 30% included Occidental (67.4%), Hess (62%), Valero (59.1%), EQT (49.3%), Exxon Mobil (48.6%), Schlumberger (47.6%), Marathon (36.4%), Halliburton (36%), and Chevron (32.9%).
In terms of aggregate market value to number of constituents, communication services led with a value of $138.2 billion, followed by information technology ($125.1 billion), consumer staples ($80.7 billion), healthcare ($80.3 billion), energy ($77.2 billion), consumer discretionary ($70.3 billion), financials ($64.3 billion), industrials ($42.9 billion), utilities ($33.9 billion), materials ($33.7 billion), and real estate ($32.5 billion).
In total there are 89 new entrants, out of which Warner Bros Discovery, First Solar, VICI Properties, Steel Dynamics, and PG&E posted more than 50% growth. However, Signature Bank, Carnival Corp, Fidelity National Information Services, and Paramount Global posted more than 30% loss in market value.
Grandhi concludes: “S&P 500 index could rebound in 2023 as investor sentiment improves because of moderate inflation, declining unemployment rate, easing of supply chain disruptions, and expectations of a slower rate hike from the Federal Reserve, which could improve the market valuation of S&P 500 constituents. Positive investor sentiment is picking up the momentum, which can be seen in the fact that S&P 500 index was already up by 1.7% as of 15 February 2023, from the level it was at on 31 January 2023.”
