Stock Market Internals Earnings Momentum, Small/Mid/Large Caps, Growth/Value/Cyclicals, and Additional Factors
Standing Taller
The Up/Down ratio reads 1.20—the best result for the last month of a quarterly reporting period since Q4-21. This figure towers over the last two years’ readings like Danny DeVito towers over a class of second graders. Tacking on other quarterly observations and you quickly see how “short” the contemporary Up/Down ratio has been.
Small Cap vs Mid Cap vs Large Cap
It took an ugly relative performance month (S&P 500 +4%, S&P 600 -2%) to break out of the 21%-27% twelve-month range for Small Cap discounts. The Small Cap value trap that began five years ago shows no signs of letting up.
Growth vs Value vs Cyclicals
Our mega-cap proxy—Royal Blue Growth—was (once again) the only game in town for Q2. That size tier outperformed the others by 8-9% and was the lone subset on the positive side of the performance ledger.
Additional Factors
The Equal Weighted S&P 500 has underperformed the Cap Weighted structure in 13 of the last 17 months. From May through June, the EW/CW performance gap was 6.3%. Since 1990, we’ve seen two consecutive months of worse EW relative performance just twice—both were in the throws of vicious bear markets: October-November 2008 (-6.6%), and February-March 2020 (-6.4%).
Better But Still Bad
The Up/Down ratio is 1.18. This is the best “two-month” figure since February 2023 (Q4-22 results) but still way below the long-term average. We’re still far from what we’d call pervasive YOY EPS growth.
Small Cap vs Mid Cap vs Large Cap
Our Small Cap discount has hardly budged this year, staying between 23%-26%. Looking at the best proxies for this vignette (the equal-weighted S&P 500 and the S&P 600), that range makes a lot of sense. Those two indexes are up 5.7% and 5.1%, respectively, through the first five months of 2024.
Growth vs Value vs Cyclicals
Our Leuthold Deep Cyclical group continues to have an excellent 2024. This basket of 30 economically sensitive names (NVDA happens to be one of them) is up 15% YTD.
On The Wings Of NVDA
Nvidia’s +27% return in May means that this chip company now has a similar market cap and index weight as Microsoft and Apple (NVDA was less than one-fifth the size of AAPL just 18 months ago). In May, Nvidia contributed a little over one-quarter of the S&P 500’s return. For the first five months of 2024, the firm’s 121% gain has subsidized one-third of the index’s YTD performance.
Recession-Like Figures Continue
The Up/Down ratio is 1.02. This survey of firms, both large and small, continues to tell us that YOY EPS growth isn’t (and hasn’t been) pervasive—despite an economy that, in the aggregate, has remained remarkably resilient.
Small Cap vs Mid Cap vs Large Cap
It’s been a year since our Ratio of Ratios matched its pandemic-era maximum discount for Small Caps, at 36%. Since then, the relationship between the two multiples has gone decidedly nowhere, staying in the SC discount range of 22-28%.
Growth vs Value vs Cyclicals
Three of the last four years have offered some very divergent returns between the Growth and Value style boxes across all market caps—a 30% spread hasn’t been uncommon. Just over one-third of the way into 2024, there has been little variance between the two styles.
Additional Factors
One of the few bright spots for the index in April was Google’s post-earnings jump. The firm held on to most of those gains and ended the month with an 8% advance. This outstanding relative performance catapulted the company back into the 4% Club for the third time in its history. This also marks the first time that four companies have simultaneously shoehorned their way into the 4% Club.
Two Years Underground
The Up/Down ratio is 1.14. Looking at the history of data, such a stretch of well-below-average readings should have either spiked higher on an economic upswing by now, or plunged even lower with a recession. The soft landing of 2015-16 posted four quarters of figures below 1.20—the current run has doubled that streak.
Small Cap vs Mid Cap vs Large Cap
Our Ratio of Ratios is unchanged from last month, as both Large- and Small-Cap indices posted similar results in March. If earnings remain the same, Large and Small Caps, alike, would need to rise another 10% to match the contemporary, absolute P/E peak set at the end of 2021.
Growth vs Value vs Cyclicals
Mega Cap Growth’s excellent start to the year hit a snag in March: The Royal Blue Growth Tier was the only style box in the red. Outside of Small Caps, Growth and Value flavors returned similar results in Q1 (+8% to +10%).
Additional Factors
The Magnificent Seven was trimmed to the Fab Four in Q1 as NVDA (+82%), META (+37%), AMZN (+19%), and MSFT (+12%) beat the overall S&P 500 and contributed just under half of the index’s total return for the quarter. We’ll score GOOGL a bogey (+8%), with AAPL (-11%) and TSLA (-29%) really making a mess of it. Heck, TSLA was the worst performing stock in the entire S&P 500 in Q1—nothing magnificent about that!
From Abysmal To Awful
Our Up/Down ratio reads 1.06 for the second month of Q4 results. That is a vast improvement from the take-away-your-shoelaces “one-month” reading of 0.66. The current ratio lands toward the bottom of our depressing eight-quarter range of “two-month” figures.
Small Cap vs Mid Cap vs Large Cap
In February, the S&P 500 outperformed the S&P 400 by 2%, helping to widen our Ratio of Ratios by a congruent amount. Currently, the meandering Small Cap discount sits right at both its one- and two-year moving averages.
Growth vs Value vs Cyclicals
Growth continued its fantastic start to the year with Royal Blue Growth +10% YTD. That gain has bolstered the median P/E multiple of this Mega-Cap proxy to 42x—near its contemporary high of 45x recorded at the end of 2021.
Additional Factors
If you happened to be in the business of producing or consuming A.I. chips (NVDA +60%, META +38%) you’ve done very well in 2024 thus far. Also, if one’s business model revolves around the negation of chips—potato or tortilla—this year has been very kind to you (LLY +29%). Those three firms, not necessarily the first names to come to mind to swing the index, have accounted for more than 40% of the S&P 500’s YTD upside.
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