(Bloomberg News) Even with the Standard & Poor's 500 Index down 19 percent since the bursting of the technology bubble in 2000, it's been no lost decade for stocks.
The benchmark gauge for American common equity climbed 66 percent from March 24, 2000, through Dec. 2, after stripping out adjustments for market value, which gives equal credit to Exxon Mobil Corp., whose shares are worth $382.5 billion, and Monster Worldwide Inc., at $945.6 million. That's little help for most investors, whose returns reflect the capitalization-weighted index, says Cliff Asness at AQR Capital Management LLC.
Gains in the S&P 500 Equal Weighted Index through the dot- com tumble, the Sept. 11 attacks, the real-estate collapse and the worst financial crisis since the Great Depression show the resilience of U.S. companies that are forecast to report record earnings this year even as Europe's debt crisis threatens growth again. Declines in the S&P 500's biggest members have left them cheaper compared with the full index than 89 percent of the time since 2000, according to data compiled by Bloomberg.
"Corporate America repaired itself," Chris Hyzy, the New York-based chief investment officer at U.S. Trust Co., which oversees about $360 billion, said in a phone interview on Dec. 1. "On an equal-weighted basis, it hasn't been a lost decade."
The S&P 500 rose 7.4 percent last week to 1,244.28 after six central banks led by the Federal Reserve made it easier for lenders to obtain dollars in emergencies and the U.S. economy added 120,000 jobs. Bigger companies rallied more, pushing the S&P 100 Index up 7.6 percent. Both measures posted their largest gains since March 2009, the data show.
The S&P 500 climbed 1.3 percent to 1,261.01 at 9:40 a.m. in New York today, as Italian Prime Minister Mario Monti proposed budget cuts and leaders prepared to meet on Europe's debt crisis. The index is up 0.2 percent this year.
Owners of stocks in the S&P 100 suffered the most since March 24, 2000. The index fell 33 percent, driven by declines of 70 percent or more in Cisco Systems Inc. and General Electric Co., the second- and third-largest companies behind Microsoft Corp. at the peak of the technology bubble.
Equities suffered two bear markets lasting longer than a year in the previous decade. The first began after the S&P 500's price-earnings ratio reached 31.2 following the 1990s rally led by computer and software makers. The second started in 2007 as global bank losses from subprime mortgages spiraled toward $2 trillion. The gauge doubled in five years starting in October 2002 as energy companies rallied 242 percent as a group and raw- material producers jumped 162 percent.
U.S. gross domestic product has increased every year since 2000 except for the 2008-2009 period, when the bankruptcy of Lehman Brothers Holdings Inc. triggered the worst recession in seven decades. Growth is forecast to reach 2.2 percent in 2012 from 1.8 percent this year, according to the median estimate of 63 economists in a Bloomberg survey.
Energy producers climbed 149 percent in the past decade as Houston-based Southwestern Energy Co. surged 44-fold to $37.69. Materials producers, including Cliffs Natural Resources Inc., gained 57 percent. The Cleveland-based miner went from a split- adjusted $3.18 to $68.34.