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In this week’s issue of the 1-Minute Market Report, I examine the asset classes, sectors, equity groups, and ETFs that led the market higher, and which market segments bucked the trend by moving lower.
By keeping an eye on the leaders and laggards, we can get a sense of where the big money is going, and where it’s coming from. Signs that market participation is broadening out are continuing to show up in the data. If this trend continues, it will improve the durability of the rally. Details to follow.
The S&P 500 rally continues.
After making a new 2023 high on Friday, the market is up 19.3% YTD.
This chart shows the monthly returns for the past year. After a brief pullback in the first week, July is now back in positive territory. Good news on the inflation front has bolstered the case for an end to the Fed’s rate hiking cycle.
The bull market continues.
This chart highlights the 28.1% gain in the S&P 500 from the October 2022 low through Friday’s close. The index is now just 4.5% below its record-high close on January 3, 2022.
The Golden Cross.
The market entered a Death Cross configuration (a Death Cross occurs when the 50-day moving average crosses below the 200-day) on March 14, 2022. The Death Cross ended on February 2, 2023. We are now in a Golden Cross configuration, with the 50-day above the 200-day.
The spread between these two moving averages is widening. Today it stands at 7.3%, more than three times as wide as the long-term average of 2.3%. This widespread is one of the reasons I’m expecting a pullback of 5-7% for the S&P 500.
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 year-to-date returns as well as the returns since the October 12, 2022 low for additional context.
The best performer last week was Asia equities, led by a strong rebound in China.
The worst-performing asset class last week was Volatility.
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.
Communication Services stocks led the way higher last week thanks to a strong move by Google.
Utilities, Real Estate, Autos, and Healthcare all finished in the red for the week.
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.
After taking a rest, the S&P Top 7 came roaring back. Emerging markets were a close second, thanks to the rebound in China.
The S&P Top 7
Here is a look at the seven mega-cap stocks that have been leading the market all year.
The 10 best-performing ETFs from last week
China stocks led the ETF pack last week.
The 10 worst-performing ETFs from last week
Solar Energy stocks are struggling this year.
The 10 best-performing stocks from last week
Here are the 10 best-performing stocks in the S&P 1500 last week. Tupperware (TUP) is up 300% over the past two weeks. TheStreet.com says “Shares of the financially battered container company are rocketing toward ‘meme’ stock territory.”
The 10 worst-performing stocks from last week
Here are the 10 worst-performing stocks in the S&P 1500 last week. Perficient was downgraded by JPMorgan after missing their Q2 numbers.
Final thoughts
The market made another new high for 2023 on Friday. Once again, it was the mega-cap tech stocks that led the way higher. But there are signs that the market leadership is broadening out. Small caps and value stocks are gaining ground. And home builders are also doing well.
The most recent inflation and GDP reports were better than expected. We might be headed for a soft landing after all.
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Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
