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A small number of mega-cap technology stocks accounted for most of the S&P 500’s gains over the past year, but that is starting to change in 2024, according to Bespoke Investment Group.
Meanwhile, the so-called Magnificent Seven stocks are a group of the best-performing tech companies, including semiconductor maker Nvidia.
NVDA
— has been leading the S&P 500’s SPX rally since early 2024, and data shows the rest of the market is starting to catch up. Bespoke analysts said in a note to clients seen by MarketWatch on Tuesday that more than 60% of the stocks in the large-cap benchmark index have posted strong gains since the beginning of the year, and the breadth of the stock market has increased. He said it was a sign that things were finally improving.
Another sign of strong breadth can be seen in the percentage of stocks that hit 52-week highs. On Monday, 106 stocks, or 21.2% of the S&P 500, set new 52-week intraday highs. This was the highest single-day price since May 10, 2021, according to Dow Jones Market Data.
Meanwhile, the S&P 500 index on Monday extended the number of consecutive trading days when the number of index constituents hit a 52-week high above a 52-week low to 85 business days, according to Bespoke data.
While reaching a 52-week high can signal positive momentum and strong investor confidence, it also indicates that the price of the underlying security has been rising consistently over the past year. It is often considered a significant bullish signal in the stock market.
look: U.S. stocks are off to their best start to the year since 2019 — and the rally isn’t just about the Magnificent Seven.
Looking at the individual sectors driving these new highs, S&P 500 Industrials XX:SP500.20 and Materials XX:SP500.15
The sector is seeing a “steady expansion” in the number of stocks hitting 52-week highs so far in 2024.
Bespoke analysts noted that 42% of stocks in the industrial sector and 30% of stocks in the materials sector traded at at least one-year highs on Monday (see chart below).
Last month, the industrials and materials sectors each outperformed the information technology sector by less than 1%, according to FactSet data. The two cyclical sectors continued to outperform technology stocks in March, with gains of 0.3% and 1.1%, respectively, month-to-date. In comparison, the consumer discretionary sector XX:SP500.25 is down 2.1%, 1.6% and 0.7%. Each FactSet data includes Telecommunications Services XX:SP500.50 sectors and Information Technology XX:SP500.45 sectors for the same period.
Bespoke analysts say the group’s seemingly inexorable rise has left some investors raising concerns about market concentration, but the group’s He said there are signs that the baton is starting to be passed to stocks.
Nearly 30% of the S&P 500’s information technology sector hit a 52-week high on Monday, but that number was lower than Friday’s level of 34%.
Meanwhile, only 23% of stocks in the consumer staples sector hit new highs on Monday. The figure was also below the sector’s new high percentage hit in mid-December, according to data compiled by Bespoke.
U.S. stocks fell on Tuesday afternoon as tech stocks struggled after last week’s rally raised concerns about high valuations. The S&P 500 index fell 0.9% to 5,085 points, the Nasdaq Composite Index fell 1.7% and the Dow Jones Industrial Average DJIA fell 0.8%, according to FactSet data.
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