In the S&P 500, Size Does Matter

Stock Market

Source: http://www.flickr.com/photos/teegardin/

For a while, it looked as though Microsoft (NASDAQ:MSFT) was the lost child of S&P 500 blue chips. The company’s stock pretty much traded sideways after it recovered from the financial crisis, falling more than 13 percent between January 2010 and early 2013. Over the same period, competitors like Google (NASDAQ:GOOG) climbed nearly 67 percent, and Apple (NASDAQ:AAPL) stock climbed about 150 percent.

But 2013 has been a change of pace for the old tech giant. Shares are up 37 percent this year to date, and data compiled by Bloomberg Businessweek show that the stock has contributed the most to the S&P 500′s 346-point gain through Monday. This is the first time in four years that Apple was not the most influential stock in the S&P 500.

The S&P 500 is weighted by market cap, which means that the bigger a company is, the more influence it has on the overall price level of the index. At $316 billion, Microsoft is one of the bigger kids on the block, and backed by its strong gains, the company added 9.230 index points to the S&P through Monday. This is more than any other company but is followed closely by Google — up 43 percent this year with a market cap of $344.9 billion — which has added 9.17 index points.

Google’s seat at No. 2 is hardly surprising. The company has grown significantly over the past few years, and its stock has traded to keep up. Shares recently broke the $1,000 mark, which many interpreted as a significant event.

The displacement of Apple, though, is also significant. Apple did more than lose its first-place ranking — it fell straight to last.

To be clear, this is not the result of enormous losses. The stock is down less than 4 percent this year to date (although there were troughs where it was much worse), but because the S&P 500 is weighted based on market cap and Apple has an enormous market cap of $472 billion, even modest declines in stock price can have a significant impact on the overall level market. To date, Apple has brought down the S&P 500 index 1.593 points by itself.

Microsoft Corporation Stock Chart - MSFT Interactive Chart - Yahoo! Finance

 Other stocks that have been major contributors to the S&P 500′s gains this year are Johnson & Johnson (NYSE:JNJ), which is up 32 percent this year to date with a market cap of $264.6 billion, and General Electric (NYSE:GE), which is up 26 percent this year to date with a market cap of $275.2 billion.

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