A key indicator of measuring small-cap companies in the United States has performed better than the Wall Street benchmark S&P 500 index in the second half of 2024, indicating that market breadth has shifted from large-cap stocks to other areas.
Charles Schwab emphasized on Tuesday that a key indicator of measuring small-cap companies in the United States has performed better than the Wall Street benchmark S&P 500 index in the second half of 2024, indicating that market breadth has shifted from large-cap stocks to other areas.
Futubull Financial APP noticed that in the first six months of this year, the S&P 500 index rose more than 14%, mainly due to the AI boom driving strong gains in technology stocks. The seven giant companies also played an important role in the bull market as their market caps surged. During the same period, the S&P SmallCap 600 index fell 1.61%.
But in the second half of the year, the performance of the small-cap index has been better than the benchmark S&P 500 index. The S&P SmallCap 600 index rose 5.55%, while the S&P 500 index rose 1.09%.
Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, said on Tuesday, "Although the upward trend in the US stock market is still intact in the second half of 2024, leadership has shifted from the giants to the small fish."
Sonders shared the following charts, focusing on the performance of average price indices for some US stocks in the first half and second half of the year:
Meanwhile, Bespoke Investment Group showed on Wednesday how large-cap technology stocks are currently lagging behind the S&P 500 index.
Bespoke stated, "In the first half of 2024, five out of the six large-cap technology stocks outperformed the S&P 500. In the second half of the year up until now, only one out of the six technology stocks has outperformed the 1.34% increase in the S&P 500 index, with the other four declining by at least 8%."
Performance of the seven sisters of technology stocks in the first half of the year and the third quarter.
Driven by the weak consumer inflation report in June, the rotation of large technology stocks began in the second half of July, giving investors confidence to withdraw from these heavyweight stocks and shift to other assets.
Another indicator that indicates the rotation and change of market leadership is the performance of the S&P 500 equal-weight index. The equal-weight index contains the same constituents as the market-cap weighted S&P 500, but each company in the equal-weight index is assigned a fixed weight, which means that companies like Nvidia (NVDA.US) have the same weight as Dollar Tree (DLTR.US).