Meet the Four Companies That Together Provided Most of 2012 Earnings Growth in the S&P 500

Moneybox
A blog about business and economics.
Nov. 26 2012 9:25 AM

Meet the Four Companies That Together Provided Most of 2012 Earnings Growth in the S&P 500

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A striking chart from Morgan Stanley's Adam Parker shows that 2012 earnings growth among S&P 500 companies was highly concentrated, with 88 percent of it coming from the top 10 firms. I was even more struck by the inequality within the top 10. Just four companies—Apple, AIG, Goldman Sachs, and Bank of America—together provided a majority of overall earnings growth among large-cap companies.

Perhaps it's just a fluke result. But in the labor market we've seen increasing "wage dispersion" where income gains are concentrated in the hands of a small number of players, and it's at least conceivable that large firms are going to start to see the same thing.

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Keep an eye on those bank profits! Revenue growth means you're finding a lot of customers, but it should be hard to earn profits in a competitive market. Apple makes crazy profits, but its competitors largely don't—one company has secured a (presumably temporary) edge over its rivals and is laughing all the way to the bank. But in the financial sector you see huge profits at multiple different competing firms, a curious situation.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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