Record-Breaking S&P 500, Yet Other Indexes Face Market Challenges

Thursday is poised to mark the fifth consecutive record close for the S&P 500, underscoring its sustained robust performance. Nevertheless, alternative metrics in the U.S. stock market paint a less sanguine picture. The Value Line Geometric Index (VALUG), an equal-weighted gauge monitoring the median performance of approximately 1,700 major listed companies in North America, significantly trails its November 2021 record highs—approximately 17% lower, as per FactSet data.

The contrast between the Value Line Geometric Index and the S&P 500, identified by the tickers VALUG and SPX, respectively, provides insightful observations. It illuminates how a select group of mega-cap technology stocks has been the driving force behind much of the S&P 500’s gains over the past year.

Steve Sosnick, Chief Market Strategist at Interactive Brokers, underscores that this discrepancy underscores the heightened concentration in large-cap stocks.

Further insights emerge from comparing the Russell 2000 index of small-cap stocks to the expansive Wilshire 5000, encompassing around 3,500 actively traded U.S. stocks.

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While the Wilshire 5000 hovers near its recent record high from January 3, 2022, the Russell 2000 lags by approximately 20% from its November 2021 record closing high. Sosnick emphasizes that this incongruity underscores the prevailing dynamic of small caps versus large caps in the market.

An examination of the S&P 500 growth index versus the S&P 500 value index reveals a recent resurgence by high-quality value stocks in catching up to the dominant tech sector. Over the past three months, the S&P 500 value index has experienced a rise of around 14%, slightly trailing the 17% increase in the S&P 500 growth-factor index.

However, the performance gap widens over the past 52 weeks, with a 29% gain for the S&P 500 growth index compared to a 13% gain for large-cap value stocks.

As of Thursday afternoon, the S&P 500 was up 0.2%, poised to conclude around 4,877 according to FactSet data.

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