The second month’s Up/Down ratio for Q1 is 2.24. The narrative of excellent earnings expansion in the Cap-Weighted S&P 500 is now joined by a near-record ratio of firms posting YOY EPS growth. Obviously, not all “up” firms in this study are matching the index’s +20% EPS growth.

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This is a three-year “low” for our Ratio of Ratios. There was a large disparity in May between the S&P 600 (+0.9%) and Russell 2000 (+4.3%), with the latter benefiting from the rally in money-losing firms. Those companies are excluded from this study, dampening the performance and P/E expansion of our Small Cap estimate.

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• Over the last twelve months, our Growth style boxes have seen wildly unequal performance. Since May 2025: Royal Blue Growth +22.3%; Mid Cap Growth +7.8%; Small Cap Growth +41.9%.

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AI mania lingered in May, as semiconductors and tech hardware accounted for three-fourths of the index’s monthly gain (23 constituents in total, including 19 with less than $1T in market cap). April and May provided the worst two-month period of relative performance for the Equal-Weighted S&P 500 in our data set, which extends all the way back to 1990.

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The first Up/Down ratio for Q1 is 2.37. This is a step back from the four-year high “one-month” figure of the previous quarter (2.63). The current reading is still robust when compared to our long-term average, but today’s expansion is getting a little long in the tooth, and expecting more advances seems greedy.

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Within our L3000 universe, P/E ratios for the average Small and Large Cap stock both rose a similar amount following April’s surge. With all of the market’s twists and turns since last October, our Ratio of Ratios has remained in a tight range, ending April right where it was seven months ago.

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Mega Cap and Small Cap Growth were the best-performing style boxes of April, overturning recent trends. Russell 2000 Growth saw its best MoM performance since November 2020 (+14.7%).  

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The YTD gap between the Equal Weighted S&P 500 and the Cap Weighted measure quickly disappeared in April… it was nice while it lasted. The index’s six largest firms posted an average advance of 23% and contributed more than half of the Cap Weighted return. The double-digit monthly gap between the S&P Top Ten Index and the Equal Weighted S&P 500 was the largest since May 2023.

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The Up/Down ratio for the final month of Q4 reporting is 1.65. As with the “final” readings of the two previous quarters, this is the best figure recorded in four years. The level and trajectory of the vignette strongly suggests that no economic recession is on the near-term horizon.

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March’s downdraft shaved a point off of our median Small Cap P/E multiple and about a point-and-a-half off the Large Cap measure. The Ratio of Ratios thus moved a tick closer to its long-term average but remains in the tight range of contemporary results.

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Value style boxes outperformed Growth by 8-10% across the capitalization spectrum.

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For Q1, the Equal Weighted S&P 500 eked out a small gain (+1%). Much more impressive was its performance relative to the index’s Top 10 (-11%). This is the widest quarterly gap in favor of the average stock since Q4-22.

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The Up/Down ratio for the second month of Q4 reporting is 1.80. Aside from a slight hiccup last spring, this Up/Down work has consistently grown for the past nine quarters. The vignette has now reached a level that has previously been very difficult to maintain, especially since the GFC.

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The equal-weighted S&P 500’s +4% return in February outperformed the S&P 600’s +2%, pushing the Ratio of Ratio’s valuation gap to its widest margin since September 2024. A declining P/E multiple for the median Small Cap in our L3000 universe was also at play, migrating from 21.4x to 20.0x.

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Since Halloween, RB Value (+14%) has dominated RB Growth (-7%); it was the best four-month stretch for RB Value relative to RB Growth since April 2022. During that time, the change in valuation is unmistakable—with Large Value now much less of a bargain.

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On a total return basis, the S&P 500’s February loss of 0.8% was its first monthly decline since last April. However, the equal-weighted S&P 500 advanced 3.5%. The resulting performance gap, in favor of the average stock, is the largest since April 2009, when the market blasted off the GFC lows.

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The first Up/Down ratio for Q4 is 2.63. Once again, this is another new high for the “one-month” ratio measured back to the amazing earnings growth following the 2020 EPS washout. Given the results of the past three quarters, this “contemporary record” storyline in our Up/Down work is feeling repetitive.

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Despite all the talk about Small Caps ripping higher, the Ratio of Ratios narrowed only 1%. The S&P 600 (best SC proxy for this vignette) started 2026 off with a 5.6% gain. The Equal Weighted S&P 500 (best LC proxy), advanced 3.3%.

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Since Halloween, RB Value (+12%) has been on a tear compared to RB Growth (-5%)—the best three-month stretch for RB Value relative to RB Growth since the start of 2022.

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The Equal Weighted S&P 500 (+3.4%) had its best month versus the S&P 500 Top 10 Index (-0.9%)since March 2025. Poor results coming from MSFT (-11%), AAPL (-5%), and Broadcom (-4%) dragged down the once bulletproof Top 10. The average stock in the S&P 500 has now outperformed the largest ten for three consecutive months, with David beating Goliath by 8.5% during that span.

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