Originally published on June 17, 2023
In today’s issue of the 1-Minute Market Report, I examine the asset classes, sectors, equity groups, and ETFs that led the market higher last week. By keeping an eye on the leaders, we can get a sense of where the big money is going.
The S&P 500 rally.
This chart highlights the 23.3% gain in the S&P 500 from the October 2022 low through Friday’s close. The S&P 500 finished Thursday, June 15 at its highest level in 14 months, and its fifth consecutive weekly gain. The index is up 15.3% year to date and is 8.1% below its record-high close on January 3, 2022.
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 gains from their respective 52-week lows for additional context.
The long-suffering Commodities asset class led the way higher last week, but is down YTD and since the October low. This asset class includes oil, natural gas, gasoline, gold, silver, copper, zinc, cotton, soybeans, and several other items that are essential raw materials for our economy.
The tech-heavy NASDAQ is having a major rebound after a terrible performance last year (it was down more than 32%).
The Asia 50 index of very large Asian firms is doing well, as China’s economy continues to open up after a long stretch of Covid-related lockdowns.
European stocks are outperforming their US counterparts, helped in part by lower starting valuations.
Blockchain-related companies are experiencing a rebound from the recent rout in Bitcoin (BTC-USD) and other cryptocurrencies. These companies don’t necessarily rely on the price of cryptos, but they often get painted with the same brush.
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.
Construction, Transportation, and Autos led the way higher last week. Technology and Consumer Discretionary stocks are close behind.
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 top 7 stocks in the S&P 1500 by market cap (big tech names, like Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG, GOOGL)) are seeing a strong up move. This was by far the worst-performing equity group last year.
Emerging Market and Foreign Developed stocks had a good week, but are lagging behind the S&P 500 on a YTD basis.
Small-cap names are in last place, as the rotation to large-cap growth continues this year.
The 10 best-performing ETFs from last week
Final thoughts
This year’s rally has now become a new bull market, after gaining more than 20% from the October 2022 low. The market’s Achilles’ heel is the narrow leadership, with big-cap tech names running miles ahead of the rest of the crowd. But there are signs that more market segments are starting to participate now.
Construction, copper miners, gold and silver, infrastructure, and oil & gas equipment are all ahead of the S&P 500 since the October lows. As the weeks and months go by, I expect to see more participation in this bull market.
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Original Post
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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