In this brief market report, we look at the various asset classes, sectors, equity categories, 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.
Another week, another record high.
The S&P 500 notched its 47th record high on Friday, reaching 5862. That puts the S&P 500 on the Top 10 list of years with the most new high days. Here's a look at the last 4 weeks.
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A look at monthly returns.
This chart shows the monthly returns for the past year. October got off to a shaky start but it is now solidly in the green.
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S&P 500 returns by decade since the '50s.
For added context, here is a chart showing the average returns (CAGR) by decade since 1950. Our current decade is off to a good start.
During the decade beginning in 2000, an investor would have done better by avoiding the large cap S&P 500 stocks. Two big bear markets - the Tech bubble bursting and the Global Financial Crisis of 2008 - ouch.
At the opposite extreme we find that the decade beginning in 1990 was the best an investor could have hoped for.
A look at drawdowns this year.
Here is a closer look at the pullbacks we've had in 2024, using a drawdown chart. The current drawdown is 0.0% after making a new high on Friday.
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A look at the bull run since it began last October.
This chart highlights the 64.0% gain in the S&P 500 from the October 2022 low through Friday's close. We are firmly above the trendline and it looks like we may have further to run before this rally is over.
Major asset class performance.
Here is a look at the performance of the major asset classes, sorted by last week's returns. I also included the returns since the October 12, 2022 low for additional context.
The best performer last week was Blockchain, as Bitcoin rallied to a near record high. The worst performer was Volatility, as it continues to ebb from last month's mini spike.
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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.
Investors were buying Construction and Utilities, and selling Energy and Healthcare.
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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 last week was Small Cap Value. Investors sold Foreign stocks and bought U.S. stocks.
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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 64% of the total YTD gain in the S&P 500. That's up from 53% just two weeks ago, reflecting the rekindled faith in the AI trade. Participation in the bull market has broadened on a year to date basis but is beginning to narrow again. NVDA was hardest hit, while AAPL shined.
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The S&P Top 7 dominance is reasserting itself.
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The 10 best performing ETFs from last week
Uranium miners are surging higher on the enticing promise of using nuclear power to run the mammoth server farms used by AI. Bitcoin miners also draw massive amounts of power from the grid.
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The 10 worst performing ETFs from last week
The United States Oil ETF was the worst performer last week. China took a hit as hopes start to dim regarding the government's stimulus pledge.
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The 10 best performing stocks from last week
Here are the 10 best performing stocks in the S&P 1500 last week.
Shares of Wolfspeed Inc. (WOLF) have surged higher since it announced "State Street Corp's Strategic Acquisition of Wolfspeed Inc Shares."
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The 10 worst performing stocks from last week
Here are the 10 worst performing stocks in the S&P 1500 last week.
Service Property Trust. (SVC) announced that it has " Reduced the Quarterly Distribution to $0.01 Per Share; $127 Million in Annual Savings Will Increase Liquidity.
114 Sonesta Managed Focused Service Hotels Expected to be Sold in 2025; SVC Expects to Use Net Sales Proceeds to Repay Debt.
Actions are Expected to Reduce Capital Expenditures and Leverage, Improve Portfolio Performance and Better Position SVC’s Hotel Portfolio for the Long Term." -Yahoo Finance
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Final thoughts
To recap, in the week just past, investors were:
- Selling large caps and buying small caps
- Selling foreign stocks and buying U.S. stocks
- Selling oil and buying uranium and gold
- Selling energy and buying construction
My view is that long term momentum is still healthy but there will be pullbacks along the way - maybe even a 10% correction - until the presidential election is over and settled. Therefore I'm advising clients not to chase stocks, but to wait for pullbacks to put fresh cash to work.