The top 5 have set a new record
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Jason Goepfert
Published: 2020-07-22 at 10:00:00 CDT
Thanks to the big tech stocks that we're all so familiar with, the most important equity index in the world has become historically top-heavy.
For the first time since 1979, only 5 stocks account for more than 20% of the S&P's market cap. Back then, it was IBM and AT&T with more than 6% weight each, followed by GM, GE, and Kodak.
Over the past year, these top 5 stocks have accumulated an additional 5% of market cap relative to the other ~500 stocks in the index, exceeding their rate of growth in 2000.
Because the large stocks are dominating the index so much right now, the index itself can show a gain even when most of its stocks are declining. That's what happened on Monday, and to a historic degree. Never before in 30 years has the S&P risen so much on a day when so many more of its component stocks declined rather than advanced. It wasn't just the S&P. Across the entire NYSE, more securities declined than advanced, and more volume flowed into those declining issues.
We tend to not put a lot of weight on single-day breadth readings. Sometimes a single stock can heavily skew volume figures, or some weird news event can trigger an odd reading. It's more worrying when these oddities pile up.
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We also looked at:
- What happens when the S&P 500 rallies but most of its stocks decline
- What happens when the S&P 500 rallies but most issues on the NYSE (and most volume) are negative
- Foreigners bought a record amount of U.S. stocks relative to market cap
- Silver is making big daily jumps to new yearly highs - how it reacted after similar spikes
- The VIX "fear gauge" has dropped for 15 out of 18 weeks
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