June 1, 2016. By Mark Barry:
The stock market has turned in solid performance year-to-date, with the S&P 500 Index up 7.9% as of last week. However, this market rally has been quite narrow, as gains in the S&P 500 are largely attributable to the performance of only a handful of companies. Five stocks – Apple (AAPL), Facebook (FB), Amazon (AMZN), Microsoft (MFST), and Alphabet (GOOGL) – have contributed 3.3 out of the 7.9 percentage point gain in the S&P 500 year-to-date, per Bespoke Investment Group.
Source: Bespoke Investment Group
While these five stocks do makeup a significant portion of the index’s total market capitalization (around 14%) it is still remarkable the degree of influence their performance has had on the performance of the market overall. This has resulted in growth stocks far outpacing value in 2017, with the S&P 500 Growth Index +13.54% versus the S&P 500 Value Index +2.79% as of this writing. Expectations for the implementation of favorable economic policy had lifted value stocks at the end of 2016, but growth stocks have now returned to favor, with inflows into tech funds the highest in over 15 years and active managers heavily overweight the sector, according to Bank of America.
What conclusions can we draw from the top-heavy nature of this market? There aren’t necessarily any major implications, but if you don’t have exposure to these five stocks . . . 2017 has probably been tough sledding for you so far.