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Stock Market Internals Earnings Momentum, Small/Mid/Large Caps, Growth/Value/Cyclicals, and Additional Factors

Nov 06 2023

An Underwhelming Start

  • Nov 6, 2023

The number of firms beating on both the top and bottom lines has been underwhelming thus far. Those that missed EPS estimates have seen their equity drop an average of 4-5% relative to the index. That’s quite a bit higher than the usual 2-3% decline we’d expect given the history of data.

Nov 06 2023

Small Cap vs. Mid Cap vs. Large Cap

  • Nov 6, 2023

The most appropriate proxies for this comparison, the Equal Weighted S&P 500 and the S&P 600, were down 4.2% and 5.8%, respectively, in October. Hence, the minimal 1% widening for the Small Cap discount makes sense.

Nov 06 2023

Growth vs. Value vs. Cyclicals

  • Nov 6, 2023

Three of our six style boxes are now in negative territory for 2023. The Mega Cap Growth proxy—Royal Blue Growth (+16.4% YTD)—has been the only game in town.

Nov 06 2023

Additional Factors

  • Nov 6, 2023

Another month, another yawning performance gap between the Cap- and Equal-Weighted S&P 500. Since the end of January, the more democratic of the two has underperformed the top-heavy version by nearly 14%. To find a nine-month span with greater relative underperformance for the Equal Weighted Index, you’d have to go all the way back to the very top of the Tech Bubble in March 2000.

Oct 05 2023

Late Cycle Lingers

  • Oct 5, 2023

With Q2-23 reporting complete, the ratio reads 1.06. Based on the final numbers recorded for the last six quarters, it looks like the longest late-cycle earnings streak in this vignette’s history (average reading of 1.08).

Oct 05 2023

Small Cap vs Mid Cap vs Large Cap

  • Oct 5, 2023

This month is the five-year anniversary of the last time Small-Cap and Large-Cap P/E ratios in our L3000 Universe were roughly equivalent. Price returns over the last five years tell most of the story about the widening Small Cap discount: S&P 500 +58%, S&P 600 +21%.

Oct 05 2023

Growth vs Value vs Cyclicals

  • Oct 5, 2023

Large Value Best In Down Quarter

Oct 05 2023

Additional Factors

  • Oct 5, 2023

Surging interest rates were the story of September, as the benchmark 10-year and 30-year yields both moved 50 basis points higher. The rate increases were felt most acutely by Utilities, as the sector ETF (XLU) fell over 13% in the twelve trading days from 9/15 to 10/2. XLRE, the Real Estate sector ETF, was squeezed as well, falling 11% during that same period.

Sep 08 2023

Not Bouncing Back

  • Sep 8, 2023

Our latest ratio of 1.05 is awful. The improved earnings picture for the aggregated S&P 500 has not trickled down to the average firm. In this earnings vignette, where one firm gets one vote, EPS growth is still very hard to come by. That fact, and the narrowness of the 2023’s market strength are certainly linked.

Sep 08 2023

Small Cap vs. Mid Cap vs. Large Cap

  • Sep 8, 2023

Our Ratio of Ratios is unchanged from July, as the average stock in both the S&P 500 and S&P 600 experienced similar pullbacks in August: -3.4% and -4.3%, respectively.

Sep 08 2023

Growth vs. Value vs. Cyclicals

  • Sep 8, 2023

After mostly sitting out July’s rally, Royal Blue Growth was the only style box to advance in August. Its YTD advantage over Royal Blue Value is back to 20%.

Sep 08 2023

Additional Factors

  • Sep 8, 2023

The market’s preference swung back to the familiar mega-cap names in August—even as the index broke a winning streak of five consecutive months. Better in up markets and better in down markets is a tough combination to beat. Nvidia (+238%) has contributed as much to S&P 500 performance as Apple (+45%) in 2023, despite starting the year with one-fifth of AAPL’s market cap.

Aug 05 2023

Barely Above Water

  • Aug 5, 2023

Our latest ratio is a dismal 1.01. The “one-month” result is usually by far the strongest reading of a quarter (long-term average ratio of 1.85). You have to go back to July 2020—the depths of the pandemic—to find a worse “one-month” reading.

Aug 05 2023

Small Cap vs Mid Cap vs Large Cap

  • Aug 5, 2023

Our Ratio of Ratios continues to narrow as smaller firms finally join in on the stock rally. Both the S&P 600 and Russell 2000 have out-gained the S&P 500 by 4% since the end of May.

Aug 05 2023

Growth vs Value vs Cyclicals

  • Aug 5, 2023

Every one of our style boxes is having a terrific summer. Small Value’s +16% leads the pack over the last two months. Even with their recent advance, median P/E multiples for Small- and Mid-Cap Value stocks are still cheap compared to their 40-year histories.

Aug 05 2023

Additional Factors

  • Aug 5, 2023

During the last two months, the Equal Weighted index has beaten the Cap Weighted version by 1.3%. That’s not much of a turnaround considering the 10.6% advantage for the top-heavy SPX from February to May. The seven largest firms (28% of the index weight) have contributed two-thirds of this year’s 20% gain in the S&P 500.

Jul 07 2023

Running Out Of Excuses

  • Jul 7, 2023

Our latest Up/Down ratio is 1.06. This “three-month” figure is a step back from Q4-22’s ratio of 1.19, and lands in the range of the abysmal readings from the first three quarters of 2022 (1.02-1.07). The current figure also doesn’t have the high look-back figures that 2022’s numbers had to overcome.

Jul 07 2023

Small Cap vs. Mid Cap vs. Large Cap

  • Jul 7, 2023

Small Caps halted their three-month relative performance slide versus Large Caps, which boosted our ratio of ratios back to the twelve-month average. 

Jul 07 2023

Growth vs. Value vs. Cyclicals

  • Jul 7, 2023

Like Q1, Growth dominated Value in Q2. The more exaggerated performance gaps were again in the larger market-cap tiers. Our Royal Blue Growth style box is up 22% YTD compared to Royal Blue Value’s +4%.

Jul 07 2023

Additional Factors

  • Jul 7, 2023

Apple’s 9% gain in June helped it to become the first firm to reach a $3 trillion market valuation. For perspective, the combined market cap of the S&P 400 and S&P 600 is roughly $3.5 trillion. AAPL’s weight in the S&P 500 also reached a new high of 7.72%—which means it is a bigger slice of the index than the combined weight of the Materials, Real Estate, and Utilities sectors.