The 1-Minute Market Report May 20, 2024

In this brief market report, we look at the various asset classes, sectors, equity categories, exchange-traded funds (ETFs), and stocks that moved the market higher and the market segments that defied the trend by moving lower.

Identifying the pockets of strength and weakness allows us to see the direction of significant money flows and their origin.

The S&P 500 has made 23 new highs so far this year.

The S&P 500 notched its 23rd record high on Wednesday of last week. In a typical year, the market makes 14 new highs over the full year. The first 5 months of this year have been particularly strong. Here's a look at the last 4 weeks.

A look at monthly returns.

This chart shows the monthly returns for the past year. After a string of 5 positive months from November through March, the market hit a speed bump in April. The gains so far in May have more than made up for April's decline.

A look at the April selloff.

Here is a closer look at the April decline, using a drawdown chart. The maximum drawdown was 5.4%.

A look at the bull run since it began last October.

This chart highlights the 48.3% gain in the S&P 500 from the October 2022 low through Friday's close. We made good progress last week even though Q1 corporate earnings so far have only showed modest improvement over last year. 

Major asset class performance.

Here is a look at the performance of the major asset classes, sorted by year-to-date returns. I also included the returns since the October 12, 2022 low for additional context.

The best performer YTD is Precious Metals. Silver made an eleven year high on Friday. 

The long-suffering China market is on a roll after Barron's hinted that Chinese authorities may inject $200 Billion to prop up falling prices. 

Equity sector performance

For this report I use the expanded sectors as published by Zacks. They use 16 sectors rather than the standard 11. This gives us added granularity as we survey the winners and losers.

It's hard to believe that Utilities are the hottest sector YTD, but you can't argue with the numbers. After selling off in January and February, Utilities have been on a tear, especially over the past 4 weeks.

Real Estate is down YTD but has been rallying over the last month.

Equity group performance

For the groups, I separate the stocks in the S&P 1500 Composite Index by shared characteristics like growth, value, size, cyclical, defensive, and domestic vs. foreign.

The best performing group year-to-date is the Magnificent 7. Even though these 7 stocks continue to lead the market higher, market participation is broadening out, which is a healthy sign.

Small and Mid-cap Value stocks are struggling to keep up with larger, growth names.

The S&P Top 7

Here is a look at the seven mega-cap stocks that have been leading the market over the past year. These seven stocks account for 54% of the total YTD gain in the S&P 500. That's down from 87% just a few months ago, providing evidence that participation in the bull market is broadening once again. 

The S&P Top 7 dominance is fading

The 10 best performing ETFs from last week

Now that the Feds are moving to decriminalize weed, Cannabis growers and dispensaries are surging higher. 

The 10 worst performing ETFs from last week

Solar Energy companies are struggling. Consumers are delaying or postponing purchases of solar systems because high interest rates are making them prohibitively expensive to finance.

The 10 best performing stocks from last week

Here are the 10 best performing stocks in the S&P 1500 last week.

Super Micro Computer, a server maker, is on fire. It's up 212% year-to-date. It's servers are used for cloud computing and AI applications.

The 10 worst performing stocks from last week

Here are the 10 worst performing stocks in the S&P 1500 last week.

Cerence beat earnings and revenue projections for Q1 but lowered guidance due to Goodwill impairment.

Final thoughts

In the first 5 months of this year, the market has accomplished what usually takes a full year to do. It's up 11.2% in 5 months vs. 10% in 12 months for a typical year. 

The 23 new highs so far this year is another bullish indicator. Over the past 96 years, when the new high count reaches 23 the average gain for the full year is 23%. 

If the Fed begins to cut rates later this year, the market will likely have a strong finish.  All in all, it looks like 2024 is on pace for a strong showing.