In this weekly market analysis, we examine various asset classes, sectors, equity categories, and exchange-traded funds that influenced market movements. Assessing winners and losers lets us discern significant money flows and their origins.
The S&P 500 showed notable strength this week, with a 5.9% increase. Following five consecutive positive days, the index is now 5.0% below the 2023 high recorded on July 31. It remains 9.1% below the all-time high set on January 2, 2022.
Monthly Returns Overview: The monthly returns chart for the past year reveals a strong start for November after market losses in August, September, and October.
Bull Market Status: The S&P 500 recorded a 21.8% gain from the October 2022 low through Friday’s close, showing significant progress. However, it remains below the long-term trend line.
Golden Cross Configuration: The market established a ‘Golden Cross’ configuration on February 2, 2023, where the 50-day moving average exceeded the 200-day moving average. The spread between these averages has narrowed to 2.3%, aligning with the long-term average.
Performance of Major Asset Classes: Blockchain, driven by Bitcoin’s upward momentum, was the best-performing asset class, while small caps gained traction as investors sought undervalued options. Volatility, as measured by the CBOE VIX index, declined by 30% during the week, making it the worst-performing asset class.
Equity Sector and Group Performance: Construction stocks and Real Estate Investment Trusts (REITs) performed well due to stabilized mortgage rates, whereas energy stocks lagged as oil prices retreated. All equity groups advanced, with small-cap stocks leading, indicating healthy market participation.
Group Equity Performance: In assessing equity group performance, stocks in the S&P 1500 Composite Index are categorized based on shared characteristics such as growth, value, size, cyclical, defensive, and domestic vs. foreign orientation.
During the past week, all equity groups experienced gains. Among these groups, small-cap stocks emerged as the top performers. This expansion in market participation signifies a positive development, indicating a healthy and diverse market landscape.
Top and Bottom Performers: Microsoft demonstrated resilience, whereas Tesla and Nvidia faced declines among the seven leading mega-cap stocks. These seven stocks contributed to 81% of the S&P 500’s year-to-date gain, indicating a broadening market participation.
Notable ETF and Stock Performances: Cathie Wood’s ARK funds performed strongly, capturing the top three spots in the ETF rankings. Among stocks, 8×8 surged by 46% after a positive Q2 earnings report, while Paycom faced challenges due to weaker Q3 results and disappointing guidance.
Last Week’s 10 Worst-Performing ETFs: The ten poorest-performing ETFs from the previous week were impacted by a reversal in oil prices, as well as managed futures being positioned unfavorably amid a market upswing.
Closing Thoughts: The dominance of the S&P Top 7 stocks persisted, accounting for 81% of the S&P 500’s year-to-date gain.
Last Week’s 10 Worst-Performing Stocks: The list enumerates the ten least successful stocks within the S&P 1500 index for the previous week. Paycom, in particular, exhibited weaker Q3 results than the expectations set by Wall Street. Additionally, the company’s guidance for Q4 and the subsequent year failed to meet investor expectations, leading to stakeholder disappointment.
In summary, the dominance of the S&P Top 7 stocks persisted, constituting 81% of the S&P 500’s year-to-date gain, as illustrated in the accompanying chart.
Since the recent market peak on July 31, the S&P 500 experienced a 5.0% decline, while the Top 7 cohort saw a 6.4% decrease. After a period marked by narrowing market participation, there are indications that market leadership is beginning to diversify once more. This trend is evident in the superior performance of small- and mid-cap stocks, which have recently outperformed their larger counterparts.
As the ongoing market pullback unfolds, careful attention will be devoted to monitoring the developments concerning the Top 7. Currently, they continue to wield significant influence over market dynamics.