Average Stock Performance Isn't Keeping Up with the Index
Only half of stocks are positive so far this year
The S&P 500 is up roughly 7% year-to-date. However, the average stock within the S&P 500 is up barely 1%. Many will argue that the market isn't beingly held up by just a few mega cap stocks, but the data just doesn't seem to support it. We started off the year strong, the average performance was marching right with the index, up 9.7% into that Feb. swing high but that's when things began to fall apart. As the market moved lower into March, the Index dropped to +0.6% on the year but at this point the average stock was down -1.1%. While the S&P bounced higher, rising 7% off the March low, most stocks were unable to join the party, up barely 1% on the year. Now just 50% of large cap stocks are positive YTD, a far cry from the gains of the largest few mega caps. In fact, AAPL, MSFT, NVDA, AMZN, and GOOGL account for 719 basis points of the YTD performance for the S&P 500.
Just because small cap stocks aren't outperforming, that alone isn't a reason to turn into a raging bear. We've seen several historical examples of small caps lagging. But right now, we don't even have a great deal of strength in the 100 largest companies. The average performance for the S&P 100 is just 3.04%, nearly half of what it was in mid-April.
In Dec. '21 I wrote in the Thrasher Analytics letter and publicly about the narrowing of leadership with a focus on performance contribution within the S&P 500. Sustainable? For a little while but it's hard to argue that it's a sign of a healthy market.
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Disclaimer: Do not construe anything written in this post or this Substack in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned.