June 3, 2024

The S&P 500 Index gained 5.0% in May, rebounding after a weak April.  Evidence of a continuing disinflation trajectory into the second half of the year encouraged investors broadly that rate cuts were still on the table. Concentration concerns have resurfaced, however, as the equal weight S&P 500 index significantly lagged the market cap weighted index. Market breadth is currently at very low levels, highlighted by the fact that more than half of the S&P 500’s return this month was attributed to only 4 stocks: Nvidia, Apple, Microsoft, and Alphabet. Earnings were also a bright spot. According to FactSet’s Earnings Insight, the first quarter blended earnings growth for S&P 500 constituents is coming in at 5.9% verses the 3.4% expected on March 31. After stripping out the Magnificent Seven names, however, the blended earnings growth rate for the remainder of the S&P 500 is -1.8%.

Information Technology (+10.1%) and Utilities (+9.0%) were the best performing S&P sectors, while Energy (-0.4%) and Industrials (+1.65%) were the worst.  Large-cap and small-cap stocks outperformed mid-cap stocks in May.  The same pattern held for growth from a style vantage point; large-cap and small-cap growth outperformed value, but mid-cap value was better than mid-cap growth.