Stock Market

Nvidia and Lilly Stock Now Point the Way for the Market. It’s a Great Reshuffling.

The stock market’s blistering run at the end of 2023 has continued in 2024. The only difference now is that there has been a changing of the guard at the top.





have sunk, while



Eli Lilly

are ascendant.

That makes sense. The economy is still growing—the U.S. added 275,000 new jobs in February—and companies are becoming more dynamic, too. The market is being pushed forward by real innovations in artificial intelligence and healthcare that will lead to growing cash flows years into the future. That’s how investors can justify the market’s higher-than-usual stock valuations.


S&P 500

index finished the week down 0.3% after dropping 0.7% on Friday, but still notched its 16th record of 2024 the day before. The

Dow Jones Industrial Average


Nasdaq Composite

fell 0.9% and 1.2%, respectively, but weren’t far off their own highs.

You wouldn’t know it by looking at the indexes, but there’s a reshuffling happening beneath the surface. Since 2018, the S&P 500 has started every year with the same four companies at the top of its market-cap leader board: Alphabet, Apple,



While those companies were known for innovation a decade ago, their success over the past few years has been marked by market-share consolidation, layoff-driven margin expansion, and scale advantages in areas like cloud computing. Monopoly power is great for stocks, but companies wielding it can lose power when new categories emerge.

Those new categories are here. Nvidia wowed investors last month when its sales results for chips powering AI applications impressed even the most bullish analysts. The stock started the year in fifth place in the S&P 500 rankings, but has now jumped to third, leaping ahead of both Amazon and Alphabet. It’s less than 10% away from Apple after starting the year at less than half of Apple’s valuation.

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Lilly has been climbing the ranks, too, as sales projections keep rising for its diabetes drug Mounjaro. Its ascendance to eighth place in market cap has helped knock Tesla out of the top 10. The electric-vehicle maker’s record of innovation has been running dry of late. It has gotten a tepid response to its Cybertruck, and has failed, at least thus far, to make a car cheap enough to compete against Chinese auto makers.

Meanwhile, innovations by Lilly and rival

Novo Nordisk

are on the verge of remaking entire categories of healthcare. Last month, Lilly presented clinical trial results that showed its drug has a side benefit for patients with liver problems, suddenly opening up even more uses for its wonder drug.

The S&P 500 is now trading for 21 times expected earnings, versus the long-term average of 16, and a premium that large is generally reason for caution. But with a strong economy and job market, these innovative new categories go a long way toward justifying it.

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Nvidia and Eli Lilly, of course, can’t push the market forward on their own. Interest rates still trump AI—and even weight loss—as stock market movers. The biggest question now is when will the Federal Reserve cut. Investors should get more answers on Tuesday, when February’s consumer price index is released.

Unlike the stock market, it’s best if inflation is subdued.

Write to Avi Salzman at

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