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Almost 40% of the market value created during the Trump rally is gone

Myles Udland
Markets Reporter

It’s been an ugly couple of weeks for the stock market.

After dropping 5% for the week ending March 23, stocks jumped 3% on Monday and gave almost all of this back on Tuesday. Markets are now sitting just above where they were in early February when the market dropped 10% in just a few days.

And with this past week’s latest leg lower being led by big tech names — notably Facebook (FB) — the total market cap the S&P 500 has shed since late January is now over $2 trillion. This drop has also erased almost 40% of the market cap gains the S&P has enjoyed since President Donald Trump was elected to office.

Donald Trump has consistently touted stock market gains since being elected president in November 2016.

From Election Day 2016 through the S&P 500’s last all-time high on January 26th, the index added $6.3 trillion in market cap to take its total market cap up to $25.46 trillion,” analysts at Bespoke Investment Group said in a blog post published Tuesday.

“Since the high on 1/26, the index has now lost $2.34 trillion in market cap, bringing the total down to $23.12 trillion. This means that 37% of the post-Trump gains in market cap have been erased during the current market pullback.” (Emphasis ours.)

The market cap losses for stocks since the end of January account for about 40% of the total gains since Trump was elected president. (Source: Bespoke Investment Group)

Now, on a percentage basis, the market is down just over 9% since the beginning of January and up just under 20% since the election. When compared to the market cap losses, this 9% slide is a more modest decline. But this also illustrates how large the market’s biggest companies have become relative to the rest of the market, and how much these companies have been involved in the recent decline.

And while the total market cap the stock market gains or loses over a period typically does not garner as much attention as the percentage gains or losses, we’d note that Trump has made boasts about the trillions gained in stock market value since his election a recurring theme on his Twitter account.

The FAAMG stocks — including Facebook, Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOGL) — have a combined market cap of around $3.5 trillion. These stocks also helped fuel the market’s rally last year. The more than 20% drop for Facebook shares and 15% for Alphabet shares since late January exacerbate the total market cap loss for the S&P over this period.

Facebook and Alphabet alone have taken $230 billion of market cap off the S&P 500 in the last two months, more than ExxonMobil (XOM), Wells Fargo (WFC), and Walmart (WMT) combined. All three of these non-tech stocks, we’d note, have seen shares slide more than 17% over this period with Wells Fargo and Walmart both entering bear markets (or losses of more than 20% from recent highs).

Bespoke notes that of the S&P 500’s $2.34 trillion loss in market cap through Tuesday’s close, the top 25 stocks are responsible for almost $1 trillion of it. This means the largest 5% of companies account for almost 40% of the market’s loss in market value.

So much of the commentary around the stock market last year focused on how much stock performance was being driven by tech stocks and the market’s biggest players. Many noted, however, that almost all rallies are ultimately driven by a handful of stocks that account for an outsized portion of the gains. And on the way down, this outsized influence remains a market feature.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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