In his recent Q1 2024 Market Commentary, John Rogers says the recent rally in the stock market has been significantly driven by four major stocks, referred to as the “fab four”: Amazon, Meta Platforms, Microsoft, and NVIDIA. These companies not only have high valuations but also a considerable impact on the overall market trends due to their size and influence.
Rogers remains cautiously optimistic. His belief is that the strength of corporate earnings will continue to support the market. Economic indicators like consumer spending, low unemployment, and robust financial and household balance sheets in the U.S. suggest a healthy economic environment. Here’s an excerpt from the commentary:
While Wall Street’s newly dubbed “fab four” have dominated the rally in recent months, their concentration and elevated valuations remain highly influential on overall market performance.
Escalating geopolitical tensions, the potential timing of the Fed pivot, as well as the outcome of the upcoming U.S. Presidential election also pose risks.
As the bull market climbs the proverbial “wall of worry,” we consider macroeconomic developments and recent headlines within the context of our long-term investment horizon.
We continue to be cautiously optimistic and believe the underlying strength of corporate profits will prove resilient.
Consumers are still spending, unemployment remains low and the balance sheets of U.S. financial institutions and households are generally in good shape.
As rates begin to subside in 2024 and beyond, we think the gap between mega-cap stocks and their small to mid-cap counterparts will narrow, fortified by consumer confidence, sticky wages, as well as slowing, yet steady long-term economic growth.
Meanwhile, we stand ready to take advantage of any pull backs. We strongly believe the disciplined investor that stays the course and consistently owns differentiated, quality business models with robust balance sheets will deliver superior returns over time.
The “Fab Four” are the largest stocks in the S&P 500 Index driving market performance: Amazon.com, Inc. (AMZN), Meta Platforms Inc. (META), Microsoft Corp. (MSFT) and NVIDIA Corp. (NVDA).
You can read the entire letter here:
John Rogers – Ariel Appreciation Fund Commentary Q1 2024
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