Stock Market Paradox: S&P 500 Soars While Other Indexes Struggle

Last updated: January 26, 2024

While the S&P 500 is basking in the glory of potential record-breaking highs, other stock market indexes are struggling to keep up. The Value Line Geometric Index, for instance, is trailing behind, still about 17% below its November 2021 record highs. This stark contrast paints a picture of how a few tech business giants have been the wind beneath the S&P 500’s wings over the past year.

s&p 500
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Steve Sosnick, chief market strategist at Interactive Brokers, explains, “The gulf between the two indexes is reflective of the increased concentration that we have in large-cap stocks.”

The Russell 2000 and the Wilshire 5000 indexes also tell a similar tale. The Wilshire 5000 is just a hair’s breadth away from its recent record high, while the Russell 2000 is lagging about 20% behind its November 2021 record. Sosnick reaffirms, “It’s really a matter of small caps versus large caps.”

The S&P 500 growth index and the S&P 500 value index also highlight this disparity. Over the past three months, high-quality value stocks have been playing catch-up with the tech leaders. The S&P 500 value index has risen about 14%, while the S&P 500 growth-factor index has climbed 17%. However, the gap widens over the past 52 weeks, with a 29% gain for the S&P 500 growth index compared to a 13% gain for large-cap value stocks.

As the market closed on Thursday, the S&P 500 was up 0.2%, poised to finish at around 4,877. This tale of two markets serves as a reminder that not all indexes are created equal, and the strength of a few can sometimes overshadow the struggles of many.

Also Read: Market Marathon: S&P 500’s Steady Stride Amid Tech Tumbles and Healthcare Hurdles

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