Net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago, per FactSet.
Largely, this has been driven by cost-cutting, not rising revenues. In 2023, investors cheered Big Tech’s cost-cutting efforts that led to significant earnings growth. In 2024, companies outside the tech sector have tapped a similar playbook, setting up the rest of the index for earnings growth through the rest of the year.
They’re going to share those good earnings with their employees, right?
No, silly, they must layoff 10% of their employees so the CEO can get a huge bonus.
Edit: Seriously, the “cost cutting” is literally layoffs
Anyone who owns shares of the S&P 500 will benefit. It may be the most common stock investment fund in small portfolios.
If your company has a 401k match program, make sure you max it out. It’s free money (the match) and you can invest in the S&P 500 through any 401k or IRA.