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Wall Street's worrisome earnings inequality

The rise of Democratic presidential contender Bernie Sanders has been fueled by anger in many parts of the country at the rise of income and wealth inequality -- the concentration of money and power in the hands of a few -- and by the discontent created in inequality's wake.

Ironically, something similar is at work within the stock market, both in terms of earnings power and equity price performance.

A study by Standard & Poor's recently cited by USA Today found that just 6 percent of U.S. companies make 50 percent of the profits. That's 28 companies out of the S&P 500 index. The analysis was based on 462 U.S.-based companies that have reported results for the 2015 calendar year.

The trend has actually worsened over the last few years as the collapse in oil and commodities prices has put the hurt on energy and materials companies. Moreover, the recent strength of the U.S. dollar has pressured the bottom line of companies reliant on foreign earnings for overall profits because a strong dollar lessens the value of overseas income when it's repatriated.

In 2014, 52 companies generated half of the overall net income for the S&P 500.

Why does this matter? For one thing, it further lessens the diversification benefit investors get by having well distributed portfolios. And it suggests that the post-2009 bull market is vulnerable to a prolonged downturn if profitability remains under pressure, and the number of stocks holding the broad market index aloft continues to shrink. And it provides an insight into why total net income fell 15 percent in 2015.

Tech-giant Apple (AAPL) was the single-largest profit contributor, responsible for 6.7 percent of total net income (up from 4.7 percent in 2014). That was driven by a 21 percent in the company's bottom line -- an impressive result considering nagging worries about demand in China and iPhone sales growth heading into the iPhone 7 debut later this year.

JPMorgan Chase (JPM) was up next, with a 3 percent share, followed by Berkshire Hathaway (BRK.A) and Wells Fargo (WFC).

The dominance of AAPL and its fellow large-cap stocks translated into a big performance differential last year. In 2015, the S&P 500 lost just 0.7 percent, while the small-cap stocks in the Russell 2000 index lost 5.7 percent. The differential has continued into 2016, with the S&P 500 down 2.5 percent for the year-to-date vs. a 5.3 percent decline for the Russell 2000.

Looking ahead, the reliance on the largest, most profitable stocks looks set to continue: According to Bank of America Merrill Lynch analysts, the earnings estimate revision ratio -- which compares the number of analysts raising vs. lowering profit estimates -- has fallen to its lowest level since April 2009.