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The Fund generally will invest at least 90% of its total assets in securities that comprise the Underlying Index. The Underlying Index consists of all of the components of the S&P 500 Index (the Parent Index). The Parent Index is designed to measure the performance of equity securities of larger U.S.companies.

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The S&amp;P 500 has seen a significant performance gap in December, with a narrow group of stocks driving returns. The equal-weighted index has fallen, while a portfolio of top-performing stocks has delivered a 16% return. This may be viewed as a bearish sign, but historical data suggests it could actually be a bullish opportunity.

Market Breadth Worsens As Tech Giants Break Free From S&amp;P 500 Reality: Is This Bullish Or Bearish For 2025?

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President-elect Donald Trump&#39;s victory has fueled a rally in equities. This is likely to sustain as the administration plans on &#34;tax cuts and deregulation will lead to higher corporate earnings,&#34; said Yogesh Kansal.

Trump&#39;s Deregulation Efforts To Benefit Energy, Oil And Gas Sectors, While AI Frenzy Will Boost FAANG Stocks And Nvidia, Says Fintech Insider

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iShares Dow Jones US Aerospace & Defense Index Fund

Morgan Stanley sees potential growth in technology, natural gas, and defense sectors under Trump&#39;s 2024 win but flags risks from trade, fiscal, and regulatory challenges.

Morgan Stanley Narrows Down Winning And Losing Bets In The First 100 Days Of Trump Administration

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Donald Trump&#39;s win is positive for the financial and energy sectors as the &#34;pro-growth effects of fiscal stimulus currently outweigh the inflationary risks in the near term​​​&#34; according to an analyst.  

Donald Trump&#39;s Win Positive For Financials, Energy Sector As &#39;Pro-Growth Effects Will Outweigh Inflationary Pressures,&#39; Says Analyst

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On CNBC&#39;s &#34;Halftime Report Final Trades,&#34; Bill Baruch picked Microsoft, expecting it to outperform the Nasda qby the end of the year.

Microsoft, Salesforce, Target  And More On CNBC&#39;s &#39;Final Trades&#39;

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Goldman Sachs predicts low 10-yr S&amp;P 500 returns due to extreme market concentration, but other Wall Street voices disagree. Dividend potential and earnings growth could lead to positive returns.

Is S&amp;P 500 Headed For A Lost Decade? Analysts Say &#39;We May Have Forgotten About Dividends&#39;

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Goldman Sachs predicts lower U.S. equity returns over the next decade due to high market concentration. Can regulation impact growth?

Goldman Sachs Predicts Bleak Long-Term S&amp;P 500 Returns As Market Concentration Hits &#39;Highest Level In 100 Years&#39;

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What&#39;s Going On With Super Micro Computer Stock On Monday?

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A market strategist shared his takes on Fed rate cuts, a small cap rally and the impact of the 2024 election on the stock market with Benzinga.

EXCLUSIVE: Market Strategist On Small Cap Rally, Election Year, Fed Cuts And What&#39;s Next – &#39;I Think The Setup Is There&#39;

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Inflation drops, speculations rise on interest rate cuts. Producer inflation data fails to alter expectations, tech sector underperforms.

Inflation Drop Fuels Rate Cut Speculation, Investors Shift To Sector Laggards, Russell 2000 Surges Over 3.6%: This Week In The Markets

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The performance gap between the cap-weighted S&amp;P 500 — tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) — and its equal-weighted sibling, the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>), has blown out to over 4 <a href="https://www.benzinga.com/markets">percentage points in December. </a>
This marks the widest monthly gap since May 2023, reflecting how a narrow group of stocks is shouldering the market's returns in the last month of the year. 
As of Dec. 17, only 90 out of 500 stocks in the S&amp;P 500 are in positive territory month-to-date, a shockingly narrow market breadth.
Excluding Nvidia Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>), all of the Magnificent Seven stocks — Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), Microsoft Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>), Alphabet (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>), Amazon.com Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>), Meta Platforms Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/META#NASDAQ">META</a>), and Tesla Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>) — have posted gains this month.
If Broadcom Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AVGO#NASDAQ">AVGO</a>), which recently surpassed the $1 trillion market-cap threshold, is added to the mix, an equal-weighted portfolio of these eight stocks has already delivered a stunning 16% return so far in December.
That stands in stark contrast to the broader market's struggles as the equal-weighted S&amp;P 500 index fell by 3% month to date. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Name</th>
<th>Price Chg. % (MTD)</th>
<th>Market Cap ($)</th>
</tr>
</thead>
<tbody>
<tr>
<td>Broadcom Inc.</td>
<td>48.27</td>
<td>1.12 trillion</td>
</tr>
<tr>
<td>Tesla, Inc.</td>
<td>37.03</td>
<td>1.52 trillion</td>
</tr>
<tr>
<td>Alphabet Inc.</td>
<td>16.72</td>
<td>2.43 trillion</td>
</tr>
<tr>
<td>Amazon.com, Inc.</td>
<td>11.18</td>
<td>2.43 trillion</td>
</tr>
<tr>
<td>Meta Platforms, Inc.</td>
<td>9.15</td>
<td>1.58 trillion</td>
</tr>
<tr>
<td>Microsoft Corporation</td>
<td>7.25</td>
<td>3.38 trillion</td>
</tr>
<tr>
<td>Apple Inc.</td>
<td>6.52</td>
<td>3.82 trillion</td>
</tr>
<tr>
<td>NVIDIA Corporation</td>
<td>-5.94</td>
<td>3.18 trillion</td>
</tr>
</tbody>
<tfoot>
<tr>
<td>Average</td>
<td>16.26%</td>
<td></td>
</tr>
</tfoot>
</table>
</figure>
<h3 class="wp-block-heading">Weak Breadth: Bad Sign Or Hidden Opportunity?</h3>
Ryan Detrick, CMT, chief market strategist at Carson Group LLC, highlighted a notable trend. 
The S&amp;P 500 has now posted 11 consecutive days of more decliners than advancers, tying the longest streak since 1996. 
While many investors might view this as a bearish signal, historical data paints a surprisingly different picture.
"Many claim this is bearish, but is it?" Detrick stated. "Looking at the longest streaks ever actually appears to be rather bullish. Significant outperformance across the board out one year."
Here's how the S&amp;P 500 performed historically following similar stretches of negative breadth:
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Date</th>
<th>Days of Negative Breadth</th>
<th>1-Month</th>
<th>3-Months</th>
<th>6-Months</th>
<th>1-Year</th>
</tr>
</thead>
<tbody>
<tr>
<td>9/10/1991</td>
<td>8</td>
<td>-2.1%</td>
<td>-1.4%</td>
<td>6.0%</td>
<td>7.9%</td>
</tr>
<tr>
<td>6/20/1996</td>
<td>11</td>
<td>-4.3%</td>
<td>3.2%</td>
<td>10.5%</td>
<td>35.6%</td>
</tr>
<tr>
<td>12/24/2018</td>
<td>8</td>
<td>13.3%</td>
<td>19.3%</td>
<td>23.9%</td>
<td>37.1%</td>
</tr>
<tr>
<td>Average</td>
<td>—</td>
<td>3.0%</td>
<td>4.8%</td>
<td>8.6%</td>
<td>14.8%</td>
</tr>
<tr>
<td>All Years Avg</td>
<td>(1950–2023)</td>
<td>0.7%</td>
<td>2.2%</td>
<td>4.4%</td>
<td>9.0%</td>
</tr>
</tbody>
</table>
</figure>
Notably, the historical data shows that returns tend to improve significantly over the next year, with 87.5% of cases showing positive performance after a prolonged stretch of weak breadth.
In essence, bad breadth doesn't necessarily spell bad news. If history holds, weak market participation could signal stronger returns ahead.
Yet investors may have to deal with an increase in volatility and potential for sharp pullbacks.
Adam Turnquist, chief technical strategist at LPL Financial, took a more pessimistic view on the S&amp;P 500's 11-day streak of decliners outpacing gainers.
&#8220;The last time this occurred was on June 20, 1996 — only days before a sharp 10% drawdown over the following month that ended almost directly on support from the rising 200-dma. While this does not imply a market top or even correction is imminent, it does add to the evidence of potentially weak footing underneath this latest advance,&#8221; he stated. 
<h3 class="wp-block-heading">Growth Sectors Shine, But Broader Rebounds Possible</h3>
The performance story has become sharply sector-specific. 
Stephen Suttmeier, CFA, CMT, analyst at Bank of America, indicated that December's gains have been heavily concentrated in growth sectors, such as Discretionary, Communications Services and Technology.
"All other sectors showed a negative performance," Suttmeier said, highlighting the underperformance of the equal-weighted S&amp;P 500 ETF (RSP). Yet, he remains cautiously optimistic, suggesting of potential &#8220;rebounds into year-end for both the NYSE Composite Index (NYA) and RSP."
Read Next: 
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</ul>
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Market Breadth Worsens As Tech Giants Break Free From S&P 500 Reality: Is This Bullish Or Bearish For 2025?

President-elect Donald Trump&#8216;s victory has fueled a rally in equities. This is likely to sustain as the <a href="https://www.benzinga.com/24/11/42158682/donald-trumps-win-positive-for-financials-energy-sector-as-pro-growth-effects-will-outweigh-inflationary-pressures-says-analyst">administration plans</a> on &#8220;tax cuts and deregulation will lead to higher corporate earnings,&#8221; said Yogesh Kansal, chief business officer at fintech company, Appreciate. He added that highly regulated sectors like oil and gas will benefit under Trump&#8217;s administration.
What Happened: While tax cuts and deregulation are positive for the stock markets, the Trump administration&#8217;s take on immigration and <a href="https://www.benzinga.com/24/11/42178994/trump-says-he-will-impose-25-tariffs-on-canada-mexico-on-first-day-of-office-and-extra-tariffs-on-china-until-they-pay-attention">higher tariffs</a> have an opposing effect on the markets.
As per Kansal, with the deportation of immigrants, &#8220;the cost of labor will go up for all companies, which basically means the profitability of companies will go down.&#8221; Additionally, he said that with tariffs, the &#8220;stock prices could be lower&#8221; because of a shift in &#8220;global demand&#8221;.
Morgan Stanley, in its note dated Dec. 3, also cautions that concerns over trade tariffs, immigration policies, fiscal sustainability, and how the scope and timing of new policies may constrain the broader economic outlook. The global financial services firm anticipates growth and innovation, particularly in the technology and natural gas sectors.
See Also: <a href="https://www.benzinga.com/24/11/42158682/donald-trumps-win-positive-for-financials-energy-sector-as-pro-growth-effects-will-outweigh-inflationary-pressures-says-analyst">Donald Trump&#8217;s Win Positive For Financials, Energy Sector As &#8216;Pro-Growth Effects Will Outweigh Inflationary Pressures,&#8217; Says Analyst</a>
Why It Matters: According to Kansal, highly regulated industries like &#8220;energy, oil and gas, health care, and banking will be seeing tailwinds&#8221; because of the deregulation attempts.
Invesco S&amp;P 500 Equal Weight ETF (ACRA: RSP) has risen by 17.3% on a year-to-date basis. While, the iShares Russell 1000 Value ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWD#NYSE">IWD</a>) and Vanguard High Dividend Yield Index ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VYM#NYSE">VYM</a>) advanced by 18.56% and 18.96%, respectively, in the same period, underperforming the S&amp;P 500 on a year-to-date basis, which has grown by 28.41% in the same period.
On the other hand, ProShares S&amp;P 500 Ex-Energy ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPXE#NYSE">SPXE</a>) grew by 28.85% year-to-date, outperforming the index.
Other analysts have also said that Trump&#8217;s victory will lead to a boom in the energy sector. <a href="https://www.benzinga.com/24/11/42158682/donald-trumps-win-positive-for-financials-energy-sector-as-pro-growth-effects-will-outweigh-inflationary-pressures-says-analyst">According to</a> Mario Georgiou, CFA and executive director, head of investments at InCred Global Wealth U.K., "deregulation supporting oil production and geopolitical risks could sustain elevated oil prices and relative valuations are attractive."
Even though the energy sector has underperformed the broader markets in 2024, "fundamentally, companies are shareholder friendly with 8-12% shareholder yields, have strong balance sheets with low net debt to EBITDA ratios and high free cash flow yields of 6.50% and above," he adds.
As per Morgan Stanley, the energy sector faces a divided future. Trump&#8217;s deregulation could benefit traditional energy, but the outlook for oil is uncertain due to potential oversupply and weak global demand, especially from China. In contrast, natural gas may see growth from strong European demand and increased domestic use for electrification and AI-powered data centers. The clean energy sector could face challenges, if Trump rollbacks Biden&#8217;s 2022 Inflation Reduction Act tax credits. However, a full repeal seems unlikely due to the benefits for Republican states.
Kansal, on the other hand, was also positive about the technology sector given the rise in the A-I frenzy. &#8220;The biggest factor that is driving the U.S. stock market right now is AI. There&#8217;s a lot of activity, lots of investment that has gone in because of the expectation of AI increasing productivity,&#8221; he said.
However, Georgiou said, &#8220;Rising bond yields increase the discount rate applied to future earnings, disproportionately affecting high-growth sectors like technology. We therefore prefer higher quality tech companies, avoiding highly leveraged, unprofitable tech stocks. This does not make us underweight Technology, as there are sufficient high-quality companies in this sector to make up the allocation with.&#8221;
Major AI payers in the U.S. stock markets include Nvidia Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>) with a 195.7% year-to-date gain and Microsoft Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>) with stock gains of 19.6% in the same period.
Amazon.com Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>) and Alphabet Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOG#NASDAQ">GOOG</a>) (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>) rose by 51.42% and 26.46% year-to-date, respectively. &#8220;So I think in the next 12 months, software as well as hardware, technology industries will do well including FAANG stocks and Nvidia,&#8221; Kansal added.
Read Next:
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</ul>
Photo courtesy: Shutterstock

Trump's Deregulation Efforts To Benefit Energy, Oil And Gas Sectors, While AI Frenzy Will Boost FAANG Stocks And Nvidia, Says Fintech Insider

The Republican party&#8217;s win in the 2024 elections could pave the way for significant policy changes, according to Morgan Stanley. The global financial services firm anticipates growth and innovation, particularly in the <a href="https://www.benzinga.com/24/11/42158682/donald-trumps-win-positive-for-financials-energy-sector-as-pro-growth-effects-will-outweigh-inflationary-pressures-says-analyst">technology </a>and <a href="https://www.benzinga.com/money/best-natural-gas-stocks">natural gas</a> sectors. However, it also cautions that concerns over trade tariffs, immigration policies, fiscal sustainability, and the scope and timing of new policies may constrain the broader economic outlook.
Morgan Stanley&#8217;s Picks
Markets have reacted positively to President-elect Donald Trump&#8216;s victory and have been trading higher than the pre-election levels. However, slower-than-expected deregulation and shallower tax cuts could impact the markets, Morgan Stanley's Global Investment Office believes investors should keep an eye on the following areas:
Energy As per Morgan Stanley, the energy sector faces a divided future. Trump&#8217;s deregulation could benefit traditional energy, but oil&#8217;s outlook is uncertain due to potential oversupply and weak global demand, especially from China. In contrast, natural gas may see growth from strong European demand and increased domestic use for electrification and AI-powered data centers. The clean energy sector could face challenges, if Trump rollbacks Biden&#8217;s 2022 Inflation Reduction Act tax credits. But a full repeal seems unlikely due to the benefits for Republican states.
Invesco S&amp;P 500 Equal Weight ETF (ACRA: RSP) has risen by 17.36% on a year-to-date basis. While, the iShares Russell 1000 Value ETF (ACRA: IWD) and Vanguard High Dividend Yield Index ETF (ACRA: VYM) advanced by 18.56% and 18.96%, respectively, in the same period, underperforming the S&amp;P 500 on a year-to-date basis, which has grown by 28.41% in the same period. Whereas, ProShares S&amp;P 500 Ex-Energy ETF (ACRA: SPXE) grew by 28.85% year-to-date, outperforming the index.
Also read: <a href="https://www.benzinga.com/24/11/42158682/donald-trumps-win-positive-for-financials-energy-sector-as-pro-growth-effects-will-outweigh-inflationary-pressures-says-analyst">Donald Trump&#8217;s Win Positive For Financials, Energy Sector As &#8216;Pro-Growth Effects Will Outweigh Inflationary Pressures,&#8217; Says Analyst</a>
Defense U.S. <a href="https://www.benzinga.com/trading-ideas/movers/24/12/42369000/booz-allen-and-palantir-partner-to-drive-us-defense-operations">defense</a> spending is expected to stay robust amid rising geopolitical tensions, says Morgan Stanley. However, European defense stocks have outperformed U.S. ones due to uncertainty about U.S. NATO involvement and increased spending by other NATO members.
Trump during his first post-election network interview with NBC News on Sunday said &#8220;If they&#8217;re paying their bills, and if I think they&#8217;re treating us fairly, absolutely, I would stay with NATO.&#8221;
Moreover, technological advancements in cybersecurity, AI, drones, and other areas are also favoring smaller, specialized companies over traditional defense giants, added Morgan Stanley.
As per the <a href="https://pro.benzinga.com/dashboard">Benzinga Pro</a> data, the S&amp;P 500 Aerospace &amp; Defense Industry Index has risen by 15.78% year-to-date, whereas Lockheed Martin Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LMT#NYSE">LMT</a>), RTX Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RTX#NYSE">RTX</a>) and iShares U.S. Aerospace &amp; Defense ETF (ACRA: ITA) have grown by 12.48%, 38.45% and 20.15%, respectively in the same period.
Also read: <a href="https://www.benzinga.com/markets/24/12/42317289/ray-dalios-bridgewater-adds-broadcom-apple-smci-in-q3-while-offloading-stake-in-ai-giant-nvidia-and">Ray Dalio&#8217;s Bridgewater Adds Broadcom, Apple, SMCI In Q3, While Offloading Stake In AI Giant Nvidia And Other Big Tech Companies</a>
Technology And Communication According to Morgan Stanley, the technology sector may see mixed outcomes. Cryptocurrencies and AI industries could benefit from Trump&#8217;s favorable stance. Whereas investments in reshoring semiconductors through the CHIPS Act may strengthen those areas, highlighting AI as a national security priority. However, social media and information companies may continue facing regulatory and antitrust challenges.
Major AI payers in the U.S. stock markets include Nvidia Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>) with a 195.7% year-to-date performance and Microsoft Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>) 19.6% growth in the same period. Whereas, Amazon.com Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>) and Alphabet Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOG#NASDAQ">GOOG</a>) rose by 51.42% and 26.46% year-to-date, respectively.
Photo Courtesy: Shutterstock.com
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Donald Trump&#8217;s <a href="https://www.benzinga.com/general/market-summary/24/11/41968003/gold-drops-to-a-two-month-low-as-investors-turn-to-bitcoin-after-trumps-victory-but-this-economist-remains-confident-that-gold-will-surge">win is positive for the financial and energy sectors</a> as the &#8220;pro-growth effects of fiscal stimulus currently outweigh the inflationary risks in the near term​​​&#8221; according to an analyst. 
What Happened: Mario Georgiou, CFA and executive director, head of investments at InCred Global Wealth U.K., in an exclusive conversation with <a href="http://pro.benzinga.com">Benzinga</a>, described tax cuts and deregulation as tailwinds to the markets. He considers inflationary policies such as tariffs and immigration impacts as headwinds, leading to a steepening yield curve, and higher term premiums.
&#8220;Financials offer an attractive risk-reward and that this recent post-election rally has room to run,&#8221; added Georgiou. According to him &#8220;financials are not only well positioned to capture the benefits of the above-mentioned Trump tailwinds, but are also less impacted / would even benefit from the Trump headwinds.&#8221;
Despite a few dips, the equity markets have been trading higher than the pre-election levels after President-elect Trump&#8217;s victory. The S&amp;P 500 has increased by 3.22%, rising from $5,782.76 on Nov. 5 to $5,969.34 as of Friday&#8217;s close. The SPDR S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) which tracks the S&amp;P 500 Index has had a similar momentum, according to data from <a href="http://pro.benzinga.com">Benzinga Pro</a>.
Meanwhile, Financial Select Sector SPDR Fund (ACRA: XLF), Vanguard Financials ETF (ACRA: VFH), iShares U.S. Financials ETF (ACRA: IYF), and SPDR S&amp;P Bank ETF (ACRA: KBE), have returned over 30% year-to-date in 2024 outperforming the S&amp;P 500 Index&#8217;s 26% run.
Also read: <a href="https://www.benzinga.com/24/11/42131911/donald-trump-appointed-doge-to-have-marginal-impact-saving-50-100-billion-says-analyst-as-elon-musk-aims-to-target-500-billion-plus-in-federal-expenditures">Donald Trump&#8217;s DOGE Initiative To Have &#8216;Marginal Impact&#8217; Says Analyst As Elon Musk Aims To Target Over $500B In Federal Expenditures</a>
Other sectors that Georgiou prefers, include energy. According to him &#8220;deregulation supporting oil production and geopolitical risks could sustain elevated oil prices and relative valuations are attractive.&#8221;
Even though the energy sector has underperformed the broader markets in 2024, &#8220;fundamentally, companies are shareholder friendly with 8-12% shareholder yields, have strong balance sheets with low net debt to EBITDA ratios and high free cash flow yields of 6.50% and above,&#8221; he adds.
Invesco S&amp;P 500 Equal Weight ETF (ACRA: RSP), iShares Russell 1000 Value ETF (ACRA: IWD), Vanguard High Dividend Yield Index ETF (ACRA: VYM) and ProShares S&amp;P 500 Ex-Energy ETF (ACRA: SPXE) have all underperformed the S&amp;P 500 on a year-to-date basis.
Why It Matters: As markets hit their 51st record high of 2024 and the S&amp;P 500 Index crossed 6,000 points, some analysts caution that<a href="https://www.benzinga.com/24/11/42134031/markets-got-it-wrong-after-elections-prospects-of-tariffs-not-good-for-equities-vs-dollar-says-ex-goldman-sachs-analyst"> tariffs could pose risks </a>to equities and suggest that the market may be overvalued.
&#8220;The prospect of tariffs isn't obviously good for equities, while it's clearly good for the Dollar," former Goldman Sachs FX strategist and senior fellow at Brookings Institution, Robin Brooks said in an X post. "Markets initially got this wrong, driving stocks up sharply right after Nov. 5,&#8221; he added.
However, Georgiou is &#8220;cautiously optimistic&#8221; about the markets, he said &#8220;a neutral to fully invested equity allocation is warranted, with a focus on sectors benefiting from Trump's policies, whilst always maintaining our core investment principles, which is a focus on fundamentals, quality, and risk management.&#8221;
<ul>
<li>Read next: <a href="https://www.benzinga.com/24/11/42134031/markets-got-it-wrong-after-elections-prospects-of-tariffs-not-good-for-equities-vs-dollar-says-ex-goldman-sachs-analyst">Markets Misread Trump Win, Says Ex-Goldman Sachs Analyst: &#8216;Prospects Of Tariffs Not Good For Equities&#8217;</a></li>
</ul>
Image via Flickr

Donald Trump's Win Positive For Financials, Energy Sector As 'Pro-Growth Effects Will Outweigh Inflationary Pressures,' Says Analyst

Market Vectors ETF Trust Market Vectors Gold Miners

MSTR

Elliott Investment Management 13F Shows Exited Position In Marathon Petroleum, Previously Holding 7,365,000 Shares; Ishares Biotechnology ETF Put Position, Previously Holding 2,800,000 Shares; Invesco S&P 500 Equal Weight ETF Put Position, Previously Holding 1,925,000 Shares; Vaneck Gold Miners ETF Put Position, Previously Holding 5,000,000 Shares; BHP Group Ltd Call Position, Previously Holding 2,500,000 Shares; MicroStrategy Convertible Note, Previously Holding $27.5 Million In Principal

On CNBC's &#8220;<a href="https://www.cnbc.com/video/2024/11/12/final-trades-invesco-sp-500-equal-weight-salesforce-inc-microsoft-and-target.html">Halftime Report Final Trades</a>,&#8221; Bill Baruch of Blue Line Capital picked Microsoft Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>), expecting it to outperform the Nasdaq between now and the end of the year.
On Oct. 30, Microsoft reported first-quarter revenue of $65.60 billion, up 16% year-over-year. The total beat a Street consensus estimate of $64.51 billion according to data from Benzinga Pro. The company reported first-quarter earnings per share of $3.30, beating a Street consensus estimate of $3.09 per share.
Don't forget to check out our <a href="https://www.benzinga.com/premarket/">premarket coverage here</a>
Bryn Talkington of NewEdge Wealth named Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) <a href="https://www.benzinga.com/quote/RSP">as her final trade</a>.
Rob Sechan of NewEdge Wealth picked Salesforce, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CRM#NYSE">CRM</a>).
Salesforce will release its third quarter fiscal year 2025 results, after the closing bell on Tuesday, Dec. 3. Analysts expect the company to report quarterly earnings at $2.44 per share, up from $1.96 per share in the year-ago period. The company projects to report quarterly revenue of $9.34 billion.
Stephanie Link of Hightower said she expects a solid quarter from Target Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TGT#NYSE">TGT</a>).
On Oct. 22, Bernstein analyst Dean Rosenblum initiated coverage on Target with a Market Perform rating and announced a price target of $168.
Price Action:
<ul>
<li>Invesco S&amp;P 500 Equal Weight ETF fell 0.8% during Tuesday's session.</li>
<li>Salesforce shares fell 0.2% to settle at $341.15 during Tuesday's session.</li>
<li>Microsoft gained 1.6% during Tuesday's session.</li>
<li>Target shares gained 1.6% to close at $155.65 on Tuesday.</li>
</ul>
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<li><a href="https://www.benzinga.com/24/11/41899303/top-3-tech-and-telecom-stocks-which-could-rescue-your-portfolio-in-q4">Top 3 Tech And Telecom Stocks Which Could Rescue Your Portfolio In Q4</a></li>
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Image: Shutterstock

Microsoft, Salesforce, Target  And More On CNBC's 'Final Trades'

Analyst Ratings

CNBC Halftime Report Final Trades: Salesforce, Microsoft, Target, Invesco S&P 500 Equal Weight ETF

The idea of a "lost decade" for S&amp;P 500 returns in the next 10 years has gained traction after a bearish report from Goldman Sachs earlier in October, which predicted very subdued annual returns for U.S. stocks over the next decade and possible underperformance <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41431485/goldman-sachs-predicts-bleak-long-term-s-p-500-returns-as-market-concentration-hits">against other asset classes. </a>
This view, however, has sparked strong pushback from other prominent Wall Street voices, including analysts at Bank of America and veteran investor Ed Yardeni.
<h3 class="wp-block-heading">Goldman Sachs&#8217; Grim Outlook: Just 3% Annual Returns Ahead</h3>
Goldman Sachs recently forecasted that the S&amp;P 500, as tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), will deliver an annualized nominal total return of just 3% over the next 10 years, placing this return scenario in the 7th percentile of historical outcomes since 1930. Adjusted for inflation, the real return would hover around 1% per year. 
According to Goldman, the S&amp;P 500 has a 72% probability of underperforming bonds and a 33% chance of lagging inflation through 2034.
David J. Kostin, chief U.S. equity strategist at Goldman Sachs, highlighted that extreme market concentration is a key factor weighing down their long-term outlook. Currently, the U.S. stock market is more concentrated in a few mega-cap tech names than at any point in the last century, which Kostin suggests could limit the broader market&#8217;s returns in the coming years.
<h3 class="wp-block-heading">Bank of America: A Case For Equal-Weighted Stocks And Dividend Reinvestment</h3>
While Bank of America's equity analyst Savita Subramanian acknowledged on Monday that the S&amp;P 500 is "statistically expensive," she indicated potential upside in the equal-weighted version of the index, tracked by the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>).
The equal-weighted S&amp;P 500 currently trades at a &#8220;historic discount&#8221; to the traditional, cap-weighted index and could offer more attractive returns over the next decade, according to Subramanian.
Subramanian suggests that dividends could provide an overlooked source of gains for investors. 
&#8220;We may have forgotten about dividends because they did little for total returns in the past decade,&#8221; she said.
She highlighted that dividends historically contributed 40% of total returns before the period of low-interest rates prior to the pandemic. 
If dividend contributions revert to historical levels, Subramanian projects that the equal-weighted S&amp;P 500 could deliver an 8.3% total return annually, thanks in part to dividend growth from mature tech giants in the "Magnificent 7" that are now initiating dividend programs.
<h3 class="wp-block-heading">Ed Yardeni: Optimism For Earnings Growth And The &#8220;Roaring 2020s&#8221;</h3>
Veteran Wall Street strategist Ed Yardeni openly challenged Goldman's downbeat S&amp;P 500 long-term forecast. 
In a note published on Monday, Yardeni wrote, "We don't agree with [Goldman's recent depressing long-term prediction for S&amp;P 500 returns." 
Yardeni is forecasting annual earnings growth of at least 6% over the next decade, consistent with the S&amp;P 500's long-term historical average of 6.5%.
Yardeni also disputed Goldman's concerns about market concentration. While tech and communication services companies now account for roughly 40% of the S&amp;P 500—similar to their share during the dot-com bubble—he indicated that today's tech giants are financially stronger and more resilient than those in 2000.
While a &#8220;lost decade&#8221; for stocks isn&#8217;t unprecedented—the S&amp;P 500 remained flat for 10 years after peaking in April 2000, amid the dot-com crash and the Great Financial Crisis—the investor highlighted that S&amp;P 500 dividends still rose by 41% during that period.
If the conditions for a &#8220;Roaring 2020s&#8221; scenario take hold—marked by a productivity-driven economic boom fueled by technological advancements, with real GDP growth stabilizing around 3% annually and inflation at 2%—Yardeni forecasts an average annual total return of 11% for the S&amp;P 500 over the next decade.
Read Next:
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Photo: Shutterstock

Is S&P 500 Headed For A Lost Decade? Analysts Say 'We May Have Forgotten About Dividends'

Goldman Sachs has issued a stark warning for U.S. equity investors, predicting significantly lower returns for the S&amp;P 500 over the next decade due to historically high <a href="https://www.benzinga.com/topic/magnificent-7">levels of market concentration. </a>
The firm's analysts, including David J. Kostin and Ben Snider, highlight that the current concentration in the U.S. stock market is the highest it has been in the past century, which they believe could weigh heavily on long-term index returns.
Market concentration currently ranks &#8220;near the highest level in 100 years,&#8221; analysts warned, adding that their &#8220;S&amp;P 500 baseline 10-year return forecast is lower than the estimates of other market participants.&#8221;&nbsp;
<h3 class="wp-block-heading">Long-Term Return Forecast: Only 3% Annually Over the Next Decade</h3>
Goldman Sachs forecasts that the S&amp;P 500 will deliver an annualized nominal total return of just 3% over the next 10 years—placing it in the 7th percentile of historical returns since 1930. Adjusting for inflation, the real return is expected to be around 1%. 
This projection stands in stark contrast to the past decade, where the S&amp;P 500 delivered a robust 13% annualized total return, placing it in the 58th historical percentile.
&#8220;The current extremely high level of market concentration is one of the main drags on our return forecast,&#8221; analysts wrote in their report.
If the current high level of market concentration were excluded from the model, the firm&#8217;s baseline forecast would improve by 4 percentage points, yielding a 10-year return estimate of 7%, which would rank in the 22nd historical percentile.
<h3 class="wp-block-heading">The Impact of Market Concentration on Returns</h3>
The extreme market concentration—driven by a handful of mega-cap companies like Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), Microsoft Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NYSE">MSFT</a>), Amazon.com Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>), Nvidia Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>) and Alphabet Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>)—means that the performance of the S&amp;P 500 is increasingly dependent on the fortunes of a small number of firms. 
&#8220;When equity market concentration is high, the performance of the aggregate index is strongly dictated by the prospects of a few stocks,&#8221; Goldman Sachs explained.
Historically, it has been challenging for any firm to sustain high levels of sales growth and profitability over long periods. As growth decelerates for these market leaders, overall earnings growth for the index tends to slow down, pulling down returns.
Another major risk is government regulation, which has previously caused growth slowdowns for dominant firms.
Goldman Sachs highlighted historical examples where regulation led to a decline in market dominance:
<ul>
<li>International Business Machine Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IBM#NYSE">IBM</a>): In 1969, IBM faced a government lawsuit that weighed on its valuations. Though the lawsuit was dropped in 1982, the company's growth slowed afterward.</li>
<li>AT&amp;T (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/T#NYSE">T</a>): The telecom giant faced a breakup order in 1982 following a lawsuit filed in 1974, which led to slower growth. However, AT&amp;T's valuations initially rose after the breakup.</li>
<li>Microsoft: In 1998, Microsoft faced antitrust lawsuits that led to a settlement in 2000. The tech giant's growth and valuations suffered for a significant portion of the following decade.</li>
</ul>
<h3 class="wp-block-heading">Equal-Weighted S&amp;P 500 Index May Outperform, Bonds To Pose A Growing Appeal</h3>
Given the risks of high market concentration, Goldman Sachs anticipates that the S&amp;P 500 equal-weighted index, which gives each stock the same weight regardless of size and is tracked by the Invesco S&amp;P 500 Equal Weighted ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>), could outperform the traditional market cap-weighted index (where larger companies have more weight) over the next decade. 
They estimate the equal-weighted index could surpass the cap-weighted index by an annualized margin of 200 to 800 basis points (2-8%).
Adding to the challenges facing the S&amp;P 500, Goldman Sachs predicts that stocks will face increasing competition from bonds in the years ahead. 
With the current 10-year U.S. Treasury yield around 4% and inflation expectations of 2.2% over the next decade, Goldman Sachs estimates that the S&amp;P 500 has a 72% probability of underperforming bonds over the next 10 years.
Furthermore, the analysts give the S&amp;P 500 a 33% chance of underperforming inflation during this period.
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Image: Shutterstock

Goldman Sachs Predicts Bleak Long-Term S&P 500 Returns As Market Concentration Hits 'Highest Level In 100 Years'

Monday, Super Micro Computer, Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SMCI#NASDAQ">SMCI</a>) stock gained after it announced a complete liquid cooling solution that includes powerful Coolant Distribution Units (CDUs), cold plates, Coolant Distribution Manifolds (CDMs), cooling towers, and <a target="_blank" href="https://www.benzinga.com/pressreleases/24/10/n41206584/supermicro-solidifies-position-as-a-leader-in-complete-rack-scale-liquid-cooling-solutions-current" rel="noreferrer noopener">end-to-end management software</a>.
Supermicro said it recently deployed over 100,000 GPUs with liquid cooling solution (DLC) for some of the largest AI factories ever built, as well as other Cloud Service Providers (CSPs).
Supermicro&#8217;s ultra-dense server with dual top-bin CPUs and 8 Nvidia Corp (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>) HGX GPUs in just 4U with liquid cooling quadruples the computing density, allowing organizations to run larger training models with a smaller data center footprint.
Also Read: <a target="_blank" href="https://www.benzinga.com/markets/equities/24/10/41162435/supermicro-and-fujitsu-partner-for-ai-powered-server-whats-in-store" rel="noreferrer noopener">Supermicro And Fujitsu Partner For AI-Powered Server: What&#8217;s In Store?</a>
This complete solution reduces ongoing power costs, Day 0 hardware acquisition, and data center cooling infrastructure costs.
However, Supermicro stock has been under pressure since the U.S. Department of Justice started probing the company following an <a target="_blank" href="https://www.benzinga.com/news/24/09/41052423/super-micro-computer-stock-falls-on-report-of-doj-probe-what-to-know" rel="noreferrer noopener">August&nbsp;short report</a> from Hindenburg Research.
The short report highlighted allegations by former employee Bob Luong over the AI server company&#8217;s inappropriate revenue recognition policies and the re-hiring of employees the company had terminated due to involvement with past accounting violations.
Supermicro had inked a settlement with the SEC in 2020, paying $17.5 million without admitting or denying the accusations.&nbsp;
Needham analyst Quinn Bolton flagged Supermicro, a first mover in rack-level liquid cooling solutions, with its liquid cooling as an opportunity for further <a target="_blank" href="https://www.benzinga.com/news/24/09/40926422/super-micro-poised-for-expansion-as-gross-margin-concerns-ease-internal-control-risks-priced-in-anal" rel="noreferrer noopener">market share expansion</a>.
Bolton noted that the stock has priced in most of the risk associated with the&nbsp;board&#8217;s review of internal controls following the short report.
Supermicro stock is up 61% in the last 12 months. Investors can gain exposure to the stock through Vanguard Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VUG#NYSE">VUG</a>) and Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>).
Price Action:&nbsp;SMCI stock is up 13.80% at $46.94 at the last check on Monday.
Also Read:
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<li><a href="https://www.benzinga.com/news/24/09/41012678/super-micro-unveils-next-gen-servers-powered-by-intels-latest-xeon-chips" target="_blank" rel="noreferrer noopener">Super Micro Unveils Next-Gen Servers Powered by Intel&#8217;s Latest Xeon Chips</a></li>
</ul>

What's Going On With Super Micro Computer Stock On Monday?

Market strategist Jay Woods spoke with Benzinga ahead of Jerome Powell's<a href="https://www.benzinga.com/etfs/sector-etfs/24/08/40529209/jerome-powell-time-has-come-for-interest-rate-cuts-cooling-in-labor-market-unmistakable"> Jackson Hole speech Friday</a> to discuss a variety of topics: rate cuts, what the election means for stocks and <a href="https://www.benzinga.com/topic/small-caps">what's next for small caps</a>.
<h2 class="wp-block-heading">Fed Rate Cut</h2>
Woods says the Fed was late to raise rates and has been late to cut rates.
The <a href="https://www.benzinga.com/top-stories/24/08/40492530/fed-minutes-reveal-plausible-case-for-interest-rate-cut-as-policymakers-cheer-inflation-progress">expected rate cut </a>by the Federal Reserve in September comes as investors try to predict what will happen to the stock market — especially with the 2024 presidential election playing out before the end of the year.
The market has not had an August/September stretch-up in the past three years, Woods said, adding that he doesn't believe it will happen by the end of September.
"Most markets bottom in October," Woods said on the Aug. 22 edition of <a href="https://www.benzinga.com/premarket-prep">PreMarket Prep</a>.
When asked about the likelihood of a rate cut, Woods said there is 0% chance of no cut and that a cut should've already happened. He predicts the rate cut will more than likely be 25 basis points. A 50-point cut could play out too aggressively as a political move.
"Whatever happens, one side of the aisle is going to condemn him for cutting,&#8221; he said. 
The question for investors, Woods said, is if the rate cut is &#8220;already baked into stock prices.&#8221; 
&#8220;We already bought the rumor,&#8221; he added, citing how the other side of the popular phrase is &#8220;sell the news&#8221; and that's what might happen first.
Smart investors who bought the dip on Aug. 5 may want to lighten up as the market could get choppy and trade sideways, he warned. "I don't expect us to explode upward immediately on that initial rate cut on the 18th."
See below.
<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"> 
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<iframe loading="lazy" title="Jay Woods, CMT - Fed Rate Cuts" width="500" height="281" src="https://www.youtube.com/embed/emvAQLsC86k?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>
</div>
</figure>
<h2 class="wp-block-heading">Small Cap Rally</h2>
Woods said when rates are cut in a non-recession time, the market typically rallies three months later, six months later and 12 months later.
One investment idea that often does well is small caps, an idea that Woods has been pounding the table on and shared <a href="https://www.benzinga.com/etfs/broad-u-s-equity-etfs/24/07/39846454/exclusive-market-strategist-jay-woods-says-rotation-in-small-caps-is-just-starting-rus">with Benzinga previously.</a>
Woods said small-cap stocks, which are commonly tracked by the iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>) have yet to make their all-time highs again.
"When they move, they move quickly," Woods said. Recall how small caps moved up 27% from October to December in 2023.
"The setup is there for small caps,&#8221; he added.
The past month has seen consumer staples and utilities outperform the magnificent seven stocks with the equal weight S&amp;P 500, which is tracked by the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>), outperforming the S&amp;P 500, which is tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>).
"This is healthy, but it's not sexy."
Read Also: <a href="https://www.benzinga.com/etfs/sector-etfs/24/08/40515453/exclusive-trump-or-harris-12-stocks-2-etfs-could-win-no-matter-whos-president-says-market-strate">EXCLUSIVE: Trump Or Harris? 12 Stocks, 2 ETFs Could Win No Matter Who&#8217;s President, Says Market Strategist</a>
Past Election Year Trends: Woods said he took a look at the 2016 and 2020 years to predict what happens in 2024, with 2020 having an outlier in the COVID-19 pandemic.
The Volatility Index, commonly referred to as the VIX, spiked early in both years and then again in September before the election.
"Headlines are going to cause a little angst," Woods said.
Woods recalled that both the 2016 and 2020 elections, each one involving Trump, were controversial.
"We rallied from Election Day into the end of the year," Woods said for 2016 and 2020 with Trump involved in both cases. "I think the setup is there."
SPY, IWM Price Action: The SPDR S&amp;P 500 ETF Trust is up 1% to $559.31 on Friday.
The iShares Russell 2000 ETF is up 3% to $219.69 on Friday.
Watch the full interview with Jay Woods on<a href="https://www.youtube.com/watch?v=vGXosi2hWTQ"> PreMarketPrep here</a>.
Read Next: 
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EXCLUSIVE: Market Strategist On Small Cap Rally, Election Year, Fed Cuts And What's Next – 'I Think The Setup Is There'

Consumer price index data this week provided encouraging signs that American inflation is moving ever closer to the Federal Reserve&#8217;s <a href="https://www.benzinga.com/government/24/06/39470021/janet-yellen-says-inflation-to-come-down-to-feds-2-target-by-2025-dismisses-possibility-of-us-recess">much-discussed 2% target</a>.
This fueled speculation <a href="https://www.benzinga.com/economics/macro-economic-events/24/07/39728268/inflation-slows-more-expected-to-3-in-june-heightens-expectations-for-rate-cuts-t">about interest rate cuts.</a>
The annual inflation rate dropped more than expected to 3% in June 2024, reaching its lowest level since March 2021. Remarkably, the monthly inflation rate showed a contraction of 0.1% for the first time since May 2020.
Investors and economists increased their convictions on the Fed's readiness to cut <a href="https://www.benzinga.com/general/politics/24/07/39731800/biden-cheers-inflation-progress-rate-cut-chorus-grows-louder-among-5-economists-this-is-just-wha">interest rates in September</a>, pushing market-implied odds of a cut to over 90%.
A <a href="https://www.benzinga.com/economics/macro-economic-events/24/07/39748331/june-producer-inflation-exceeds-forecasts-restrains-investor-euphoria-following-c">higher-than-expected producer inflation</a> data report Friday did little to alter these expectations significantly, as the <a href="https://www.benzinga.com/markets/equities/24/07/39750466/us-consumer-morale-dips-more-than-expected-in-july-sentiment-remains-stubbornly-subdued">latest consumer sentiment report</a> from the University of Michigan confirmed subdued morale and a decline in inflation expectations.
In the markets, sectors previously impacted by high interest rates — and have not yet priced in potential reductions in borrowing costs — outperformed the tech sector, which had already largely <a href="https://www.benzinga.com/markets/asia/24/07/39733667/inflation-data-sparks-rush-for-gold-real-estate-treasuries-yen-traders-see-september-rate-cut-as-don">anticipated such rate cuts.</a>
The equal-weight S&amp;P 500, as tracked by the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) outpaced the cap-weighted S&amp;P 500, monitored through the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), while value stocks outperformed their growth counterparts. 
Both the real estate sector — as tracked by the Real Estate Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLRE#NYSE">XLRE</a>) – and the Russell 2000 small-cap index — as replicated by the iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>) – achieved their strongest week of the year.
Chart Of The Week: Russell 2000 Enjoyed Strongest Week Since October 2023
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="488" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/12143443/image-17-1024x488.png" alt="" class="wp-image-434055" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/12143443/image-17-1024x488.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/12143443/image-17-300x143.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/12143443/image-17-768x366.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/12143443/image-17-1536x732.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/12143443/image-17.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
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Rare Market Dynamic: On Thursday, the Russell 2000 surged 3.63% while the Russell 1000 large-cap index fell 0.66% — the fifth time in history that the performance difference between the two indexes exceeded 4%. It has previously occurred during major market downturns. This time it came near an all-time high <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/07/39739225/the-market-did-something-today-that-has-only-occurred-4-times-in-history">for the S&amp;P 500.</a>
Weight-Loss Pill: Pfizer Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PFE#NYSE">PFE</a>) announced advancements in its once-daily weight-loss pill, danuglipron, showing a favorable pharmacokinetic and safety profile. The pharma giant plans to conduct dose optimization <a href="https://www.benzinga.com/general/biotech/24/07/39730398/pfizer-advances-once-daily-weight-loss-pill-as-it-catches-up-to-tap-the-lucrative-market">studies in late 2024.</a>
Tech Stock Poll: Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), Microsoft Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NYSE">MSFT</a>), Meta Platforms Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/META#NASDAQ">META</a>) and Alphabet Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>) all hit 52-week highs. A Benzinga poll reveals investor preferences:
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<li>Microsoft led with 32%</li>
<li>Apple at 29%</li>
<li>Google at 23%,</li>
<li>Meta at 16%. </li>
</ul>
Investors cited artificial intelligence growth potential and valuations as key <a href="https://www.benzinga.com/etfs/broad-u-s-equity-etfs/24/07/39716688/apple-microsoft-meta-google-which-would-you-buy-at-all-time-high-investor-poll-reveals">factors influencing their choices</a>.
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Image: Shutterstock

Joshua Brown of Ritholtz Wealth Management named Pfizer Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PFE#NYSE">PFE</a>) as his final trade on the latest edition of CNBC's &#8220;<a href="https://www.cnbc.com/video/2024/07/11/final-trades-pfizer-l3harris-tech-the-rsp-and-gdx.html">Halftime Report Final Trades</a>.&#8221; 
On Thursday, Pfizer announced it will advance the development of Danuglipron. The company selected the once-daily weight loss drug for continued advancement based on an <a href="https://www.benzinga.com/news/24/07/39736144/why-pfizer-stock-is-moving-higher-on-thursday">ongoing pharmacokinetic study</a>.
"Obesity is a key therapeutic area for Pfizer, and the company has a robust pipeline of three clinical and several pre-clinical candidates," said Mikael Dolsten, chief scientific officer &amp; president, Pfizer Research and Development.
Bryn Talkington of Requisite Capital Management picked Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>). &#8220;I think the market will continue to <a href="https://www.benzinga.com/quote/RSP">broaden out,&#8221; she added</a>.
Bill Baruch of Blue Line Capital named VanEck Gold Miners ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GDX#NYSE">GDX</a>) as his final trade.
Don't forget to check out our <a href="https://www.benzinga.com/premarket/">premarket coverage here</a>
Stephanie Link of Hightower picked L3Harris Technologies, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LHX#NYSE">LHX</a>) as her final trade.
L3Harris Technologies is scheduled to release its second quarter 2024 financial results on Thursday, July 25, after the closing bell. Analysts expect the company to report quarterly earnings at $3.16 per share, up from $2.97 per share in the year-ago period. The company is projected to post quarterly revenue of $5.29 billion, compared to $4.37 billion <a href="https://www.benzinga.com/quote/LHX/earnings">in the year-earlier quarter.</a>
Price Action:
<ul>
<li>L3Harris Technologies shares gained 1.4% to close at $230.34 on Thursday.</li>
<li>Invesco S&amp;P 500 Equal Weight ETF rose 1.2% during Thursday's session.</li>
<li>VanEck Gold Miners ETF gained 2.8% on Thursday.</li>
<li>Pfizer shares gained 1.1% to close at $28.66 during Thursday's session.</li>
</ul>
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<li><a href="https://www.benzinga.com/news/earnings/24/07/39743368/s-p-500-falls-following-june-inflation-data-fear-greed-index-moves-to-neutral-zone">S&amp;P 500 Falls Following June Inflation Data: Fear &amp; Greed Index Moves To &#8216;Neutral&#8217; Zone</a></li>
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Pfizer, L3Harris Technologies And More: CNBC's 'Final Trades'

CNBC Halftime Report Final Trades: Pfizer, L3Harris Technologies, VanEck Gold Miners ETF, Invesco S&P 500 Equal Weight ETF

The rise <a href="https://www.benzinga.com/topic/meme-stocks">of meme stocks</a> in recent years has led to more investing education — and some investors realizing they need to diversify.
What Happened: Benzinga founder and Chairman <a href="https://x.com/JasonRaznick">Jason Raznick</a> shared his take on <a href="https://www.benzinga.com/general/gaming/23/01/30412695/gamestop-short-squeeze-anniversary-a-look-back-at-david-vs-goliath-battle-and-whats-next">how meme stocks</a> have changed the markets during an interview on the Schwab Networks' "Market On Close" Tuesday.
The COVID-19 pandemic saw an influx of new retail traders get involved in the markets, which then shifted to the meme stock craze later, Raznick said. 
On Benzinga, content would often center on stocks like GameStop Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GME#NYSE">GME</a>), he said, recalling that some readers would get mad when news like downgrades on the stock or caution around investing in meme stocks was shared.
The caution around meme stocks came out of the history of dot-com stocks and investors getting wiped out, Raznick <a href="https://schwabnetwork.com/">said</a>.
"I didn't want to lose a generation of investors."
Many companies that had IPOs during the dot-com period went bankrupt, the Benzinga founder said. Investors didn't leave the markets after meme stocks, which may have been due to education and diversification efforts, he said. 
More investors are looking at index funds and not just individual stocks on Benzinga, Raznick said. 
"If this is your life savings, [it] doesn't make sense to be all in one stock."
The Benzinga founder said it's the story that often drives meme stocks like GameStop, AMC Entertainment Holdings (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AMC#NYSE">AMC</a>) and Chewy Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CHWY#NYSE">CHWY</a>).
"There's no technicals to help explain these things,&#8221; Raznick said, adding that with some meme stocks, "the story sounds so good.&#8221;
Read Also: <a href="https://www.benzinga.com/news/24/03/37514201/innovation-risk-and-growth-lessons-in-entrepreneurship-from-benzingas-co-founder-jason-raznick">Innovation, Risk And Growth: Lessons In Entrepreneurship From Benzinga&#8217;s Co-Founder Jason Raznick</a>
What's Next: Schwab Network host Oliver Renick asked if the meme stock craze was a net positive: lots of people made money, but investors also lost money.
"I think it's a net positive, but close to being a net negative," Raznick said.
One positive that came out of meme stocks was retail traders learning from social media and other investors to not put all their eggs in one basket, and to diversify.
Raznick spoke of caution and diversification when it comes to the S&amp;P 500, which is tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>).
The Magnificent Seven stocks make up a large portion of the index and tracking ETFs, and Raznick said that if those stocks fall, "the index gets killed."
Raznick said he has been diversifying by buying equal-weighted S&amp;P 500 ETFs. Schwab&#8217;s Renick named the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) as one option available for investors.
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CHWY

Benzinga Founder Jason Raznick On Meme Stocks, Importance Of Diversification: 'Didn't Want To Lose A Generation Of Investors'

The second quarter is projected to be the first in which the &#8220;Other 493&#8221; companies — those outside the &#8220;Magnificent 7&#8221; tech giants — will exhibit earnings growth after five quarters <a href="https://www.benzinga.com/earnings#:~:text=The%20time%20period%20that%20corresponds,%2C%20June%2C%20September%20and%20December.">of stagnation or decline.</a> 
This development could broaden market gains as tech sector growth slows, according to Bank of America.
Bank of America&#8217;s analysts, Ohsung Kwon, CFA and Savita Subramanian, presented a more conservative outlook on Q2 earnings for U.S. companies compared to consensus estimates. 
While the consensus expects earnings per share (EPS) to rise by 9% year-over-year in Q2, the analysts anticipate a 2% beat which aligns with historical averages but is the smallest since Q4 2022. 
Behind the weaker-than-expected forecasts, analysts cited the weak macroeconomic data last quarter.
&#8220;Economic Surprise Index&nbsp;is at the lowest level since June 2015.&nbsp;The historical relationship points to a&nbsp;3% EPS&nbsp;miss,&#8221; Bank of America wrote. 
<h3 class="wp-block-heading">&#8216;Magnificent 7 vs. The Other 493&#8217;</h3>
The Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) has underperformed the cap-weighted SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) by approximately 13 percentage points year-to-date. This gap widens significantly when comparing the broader market with the Magnificent 7, as tracked by the Roundhill Magnificent Seven ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MAGS#NYSE">MAGS</a>), as illustrated in the chart below from Benzinga Pro.
This trend could potentially be halted in the upcoming weeks. As the tech sector&#8217;s rapid growth begins to decelerate, the broader market, represented by the &#8220;Other 493&#8221; companies, is poised for earnings growth, according to Bank of America. 
<figure class="wp-block-image size-large"><a href="http://www.benzinga.com/pro/register/?utm_source=BZprocontent070924&amp;t=be2bearmibe3na1"><img loading="lazy" decoding="async" width="1024" height="544" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/09141136/image-14-1024x544.png" alt="" class="wp-image-427078" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/09141136/image-14-1024x544.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/09141136/image-14-300x159.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/09141136/image-14-768x408.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/09141136/image-14-1536x816.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/09141136/image-14.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></a></figure>
&#8220;2Q is expected to&nbsp;be&nbsp;the first&nbsp;EPS&nbsp;growth quarter for the Other 493&nbsp;since 4Q22, whereas growth for the Magnificent 7 is expected to slow for the second straight quarter and again in 3Q,&#8221; analyst wrote.
The Magnificent 7&#8217;s earnings recovery began earlier because they entered an earnings recession in the second half of 2022. This prompted tech companies to implement cost-cutting measures sooner, resulting in an earlier recovery, Bank of America explained.
Year-to-date, tech layoffs have significantly decreased, while layoffs outside the tech sector have increased, indicating more cost-cutting opportunities in non-tech industries. 
These efforts are expected to enhance margins for the &#8220;Other 493&#8221; in 2024-25.
<h2 class="wp-block-heading">&#8216;Virtuous Cycle&#8217; From AI Investments</h2>
A virtuous cycle appears to be forming from AI investments. Major tech companies — Microsoft Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>), Amazon.com Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>), Alphabet Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>) and Meta Platforms Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/META#NASDAQ">META</a>) — confirmed last quarter that 2024 is set to be the first year of a multi-year AI investment cycle. The consensus capex forecast for these companies increased by $18 billion during Q1 earnings season to approximately $200 billion, a 34% year-over-year rise.
Historically, companies in reinvestment cycles underperform, but AI investments could create a virtuous cycle. 
Semiconductor &#8220;are the most obvious beneficiaries,&#8221; Bank of America highlighted. Yet, the rising power consumption from AI and the construction of data centers are anticipated to boost demand for electrification, construction, utilities, and commodities, ultimately creating more jobs.
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Image: Shutterstock

MAGS

'The Other 493' Set To Grow More Than 'Magnificent 7' This Earnings Season: Bank Of America

The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) is up over 3.5% in the last 30 days, an impressive feat amid <a href="https://www.benzinga.com/top-stories/24/07/39652831/whartons-jeremy-siegel-implores-jerome-powell-to-signal-september-rate-cuts-we-are-in-a-slowing-econ">signs of slowing</a> in the U.S. economy. Despite investor optimism, only 17% of S&amp;P 500 components have outperformed the index in the past month, a historic low.
The Data: A <a href="https://x.com/KobeissiLetter/status/1810332300766228769">post</a> on X relayed data from The Compound News.
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"> 
<div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">How concentrated has this market become? Just 17% of S&amp;P 500 stocks have outperformed the index over the last 30 days, the lowest share in at least a decade. In other words, only 85 stocks in the S&amp;P 500 have had higher returns than the index itself over the last month. By… <a href="https://t.co/ETPAG2ZCi3">pic.twitter.com/ETPAG2ZCi3</a>
&mdash; The Kobeissi Letter (@KobeissiLetter) <a href="https://twitter.com/KobeissiLetter/status/1810332300766228769?ref_src=twsrc%5Etfw">July 8, 2024</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></div>
</figure>
According to the data, just 17% of S&amp;P 500 members — approximately 85 companies — outperformed the overall index in the past 30 days. The 10-year average for overperformance is 49%, far above today&#8217;s figure.
This is the lowest number for 30-day outperformance in at least a decade. The figure reached above 50% for extended periods in mid-to-late 2022, late 2023 and early 2024.
Tesla Inc, Adobe Inc., Apple Inc and Amazon.com Inc are among the few companies to outperform the index, according to <a href="https://benzinga.com/pro">Benzinga Pro</a>. Nike Inc, Danaher Corp and CVS Health Corp are a few of the biggest underperformers.
Why it Matters: The data reflects the fact that just a few technology-focused stocks have a historically outsized impact on the market. Big Tech has outperformed companies in other industries.
High concentration is a double-edged sword: while investors with S&amp;P 500 exposure stand to benefit even more from tech&#8217;s continued rally, they also face increased risk if the market sours on the tech play. <a href="https://www.goldmansachs.com/intelligence/pages/is-the-sp-too-concentrated.html">According</a> to Goldman Sachs Research, the S&amp;P 500 has historically rallied in the year following periods of peak concentration.
There are some concerns that the standard S&amp;P 500 has become overvalued compared to its more diversified, Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) counterpart.
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Photo: Shutterstock

Just 17% Of S&P 500 Stocks Outperform The Index: What Does That Mean For The Market?

One of the most hawkish investment firms on Wall Street might soon revise its estimates and anticipate an earlier rate cut from the Federal Reserve if June&#8217;s new inflation figures confirm another unmistakable signal of a return <a href="https://www.benzinga.com/topic/inflation">towards the 2% target.</a>
Despite recent benign inflation reports, Bank of America still maintains its call for rate cuts to begin no earlier than December 2024. This stance, which contrasts sharply with the current market pricing seeing a 76% chance of cuts starting as early as September, may be softened after the upcoming Consumer Price Index (CPI) report on Thursday.
&#8220;We expect the June CPI report to be another confidence builder following the undeniably good May report,&#8221; wrote economist Michael Gapen in a recent note.
<h1 class="wp-block-heading">June CPI Projections</h1>
Bank of America forecasts the headline CPI to have risen by 0.1% month-over-month, partly due to another drop in energy prices. This would result in the year-over-year rate falling by a tenth to 3.2%. 
Analysts expect core CPI to have increased by 0.2% month-over-month. 
&#8220;While this is not quite as low as May, it would be a good print for the Fed,&#8221; Gapen added.
The key driver of the forecasted acceleration in core CPI relative to May is core services excluding rent and owner&#8217;s equivalent rent (non-housing services). 
This aggregate category surprisingly edged down in May, largely due to a slight decline in motor vehicle insurance. For June, however, increases in motor vehicle insurance and non-housing services are expected. 
Non-housing services inflation should moderate over time given cooling services wage inflation; however, a sustained period of deflation is unlikely.
Aside from services, core goods prices are expected to have fallen for a fourth consecutive month, partly due to another decline in new vehicle prices. Inventories of new vehicles continue to climb, leading to greater use of incentives by manufacturers. 
Beyond this month, upside risks to core goods through higher shipping costs are seen. However, with demand cooling, it may be harder to pass these costs onto consumers.
<h1 class="wp-block-heading">Implications for Fed Policy</h1>
Should the CPI report print in line with Bank of America&#8217;s expectations, the firm would maintain its expectation for the Fed to start its cutting cycle in December. 
That said, another 0.2% month-over-month print for core CPI would tilt the risk towards an earlier cut, especially given signs of softening activity.
<h1 class="wp-block-heading">Analysts Maintain Positive View On Stocks</h1>
Bank of America technical analysts continue to hold a bullish view on U.S. equities. 
The S&amp;P 500 (SPX), S&amp;P 100 (SP. SP100), NASDAQ 100 and NASDAQ Composite (CCMP) have all soared to new all-time highs in early July, signaling robust market confidence and momentum. However, not all indices are sharing in the celebration. The Russell 2000, as tracked by the iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>),
Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) and the SPDR Dow Jones Industrial Average (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIA#NYSE">DIA</a>) continue to lag, falling short of reaching new peaks.
Even these laggards have constructive absolute chart patterns that support the case for higher highs, but they need to join the SPX at new highs to confirm a healthy summer rally for U.S. equities.
Read Now:
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<li><a href="https://www.benzinga.com/markets/equities/24/07/39666482/french-luxury-stocks-fall-as-tax-concerns-rise-after-left-wing-election-upset-a-left-government-">French Luxury Stocks Fall As Tax Concerns Rise After Left-Wing Election Upset: &#8216;A Left Government Might Pose Challenges For Billionaire Owners&#8217;</a></li>
</ul>

Photo: Shutterstock

SPDR Dow Jones Industrial Average ETF Trust

If June Inflation Report Is 'Another Confidence Builder,' Fed Rate Cut Will Come Next: Bank Of America

Artificial intelligence has captivated the financial markets and sent the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) into an upward spiral. Even though the S&amp;P 500 is up over 15% through the first half of 2024, only a few firms have reaped <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/06/39484650/microsofts-generative-ai-push-significantly-outpacing-azure-investments-goldman-sac">generative AI&#8217;s benefits</a>.
The Data: A <a href="https://x.com/MikeZaccardi/status/1808132089104961977">post</a> on X relayed data from Goldman Sachs.
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"> 
<div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">Approximately 5% of US Firms Are Using Generative AI to Produce Goods and Services <a href="https://t.co/JSoLlmXTuo">pic.twitter.com/JSoLlmXTuo</a>
&mdash; Mike Zaccardi, CFA, CMT &#x1f356; (@MikeZaccardi) <a href="https://twitter.com/MikeZaccardi/status/1808132089104961977?ref_src=twsrc%5Etfw">July 2, 2024</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></div>
<figcaption class="wp-element-caption">Despite the market&#8217;s hype, only 5% of U.S. firms are actually using generative AI. The figure is up slightly from October 2023 and is projected to increase to about 6% by the end of 2024. The note compiled data from a list of industries, some including: </figcaption></figure>
<ul>
<li>Information companies: 15% of firms use GenAI. Projected to grow to over 20% by year-end.</li>
<li>Professional, scientific and technical companies: Around 12% of firms use GenAI. Projected to grow to over 15% by year-end.</li>
<li>Education companies: Around 6% use GenAI. Projected to grow to 12% by year-end.</li>
<li>Finance and insurance companies: Around 5% use GenAI. Projected to grow to 10% by year-end.</li>
<li>Health care companies: Around 5% use GenAI. Projected to grow to over 6% by year-end.</li>
<li>Construction companies: Around 4% use GenAI. Projected to grow to 5% by year-end.</li>
</ul>
Why it Matters: The data is consistent with the narrative that large information technology companies use generative AI substantially more than any other industry.
While the S&amp;P 500 is up over 15% in 2024, the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) is up under 4%, indicating that just a few large tech companies have moved the needle in the broader S&amp;P 500. The iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>) is up just 1% year-to-date.
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</ul>

Photo: Shutterstock

Despite The Market Hype, Only 5% Of US Firms Use Generative AI In Production

As the S&amp;P 500 and Nasdaq 100 indices continue to notch <a href="https://www.benzinga.com/top-stories/24/06/39383798/the-ai-big-10-10-ai-stocks-now-comprise-28-of-s-p-500-up-from-14-in-2023">new all-time highs</a>, it&#8217;s clear that the rising tide has not lifted all boats.
Sharp-eyed analysts and investors have noted some discordant features in a stock market at its peak, raising questions about the euphoria that currently reigns <a href="https://www.benzinga.com/markets">supreme on Wall Street.</a>
<h2 class="wp-block-heading">Mega-Cap Dominance Unprecedented Since Late 2008</h2>
The dominance of mega-cap stocks hasn&#8217;t been this pronounced in nearly sixteen years. 
The top 100 U.S. stocks by market capitalization, monitored through the iShares S&amp;P 100 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/OEF#NYSE">OEF</a>), have never been stronger against the Russell 1000 Index, as tracked by the iShares Russell 1000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWB#NYSE">IWB</a>), since December 2008-.
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="500" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142746/image-47-1024x500.png" alt="" class="wp-image-397825" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142746/image-47-1024x500.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142746/image-47-300x147.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142746/image-47-768x375.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142746/image-47-1536x750.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142746/image-47.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
David Morrison, senior market Analyst at Trade Nation, commented, &#8220;There are concerns about the US market's lack of breadth with so much of the overall performance concentrated in the stock price of a few corporations. In fact, the five biggest companies by market capitalization in the S&amp;P 500 account for nearly 30% of its value. The size and outperformance of this select group is reflected in its valuation, which is way above that of the rest of the constituents.&#8221;
<h2 class="wp-block-heading">Poor Participation In Market Rally</h2>
The current bull market rally lacks broad participation, with only a few companies driving the major indices higher.
The cap-weighted S&amp;P 500 Index, tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), has surged to levels last seen in November 2008 when compared to its equally-weighted counterpart, represented by the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>).
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="500" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141510/image-44-1024x500.png" alt="" class="wp-image-397797" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141510/image-44-1024x500.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141510/image-44-300x147.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141510/image-44-768x375.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141510/image-44-1536x750.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141510/image-44.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
&#8220;We haven't had a four-week span where the US stock market has gone up so much with so many stocks within the market going down, based on data going back to 2002,&#8221; said Luke Kawa, markets editor at Sherwood.
SentimenTrader in a post on social media X, indicates that while the Nasdaq 100 continues to achieve record highs, many of its constituent stocks are underperforming, dropping to monthly, quarterly, or even yearly lows and falling below their 10-, 50-, and 200-day moving averages. 
&#8220;This is not normal. In fact, it&#8217;s never happened before to this degree. There is a possibility that the average stock will catch up to the index, that is not how things usually pan out. Almost never, in fact. Risk is high in that index,&#8221; they wrote.
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"> 
<div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">The Nasdaq 100 continues to notch record high after record high. Many of its stocks are not only lagging, but they&#39;re falling to monthly, quarterly, or even yearly lows and below their 10-, 50-, and 200-day moving averages. This is not normal. In fact, it&#39;s never happened before… <a href="https://t.co/gopsw8WUJn">pic.twitter.com/gopsw8WUJn</a>
&mdash; SentimenTrader (@sentimentrader) <a href="https://twitter.com/sentimentrader/status/1802687052724527265?ref_src=twsrc%5Etfw">June 17, 2024</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></div>
</figure>
<h2 class="wp-block-heading">Tech Supremacy Surpassing Historical Extremes</h2>
The tech sector has been the primary driver of the extreme relative valuations among major U.S. stock indices. 
The Nasdaq 100, when compared to both the Dow Jones Industrial Average and the Russell 2000, is at historic highs, surpassing previous peaks seen during the dot-com bubble and in December 2021 at the end of the ultra-low interest rate era.
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="500" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141752/image-45-1024x500.png" alt="" class="wp-image-397801" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141752/image-45-1024x500.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141752/image-45-300x147.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141752/image-45-768x375.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141752/image-45-1536x750.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20141752/image-45.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="500" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142011/image-46-1024x500.png" alt="" class="wp-image-397808" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142011/image-46-1024x500.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142011/image-46-300x147.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142011/image-46-768x375.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142011/image-46-1536x750.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/20142011/image-46.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Read now: <a href="https://www.benzinga.com/government/24/06/39400726/us-budget-crunch-cbo-warns-federal-interest-costs-now-higher-than-defense-spending-deficits-to-remai">US Budget Crunch: CBO Warns Federal Interest Costs Now Higher Than Defense Spending, Deficits To Remain Above 5.5% Until 2034</a>
Image created using artificial intelligence via Midjourney.


Maria Elvira SalazarHouse (R-FL)	$1K - $15K	etf	Purchase	May 31, 2023	Apr 13, 2023	House
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