The State of the U.S. Financial Markets As of Mid-Year
As Q3 begins, this week's AAII makes an assessment of where the markets stand at this half-way point. Happy reading and hope all enjoyed this great weekend.
AAII Investor Update --
The State of the U.S. Financial Markets As of Mid-Year
Thursday, July 6, 2023
Dear Member,
The headline numbers for the first half of the year look pretty, pretty good. The S&P 500 index rebounded by 16.89%. Yields on the benchmark 10-year Treasury note are essentially unchanged after having more than doubled last year.
What the headline numbers indicate and what is occurring beneath the surface isn't always the same.
Consider stocks. The S&P 500 Equal Weight index's return for the first half of the year is 7.03%. This is good, but still less than half that of the S&P 500. The same stocks are in both indexes, only the weightings differ. The S&P 500 is a market-capitalization-weighted index, meaning larger stocks have more influence on its returns. The S&P 500 Equal Weight seeks to weight each stock equally.
A similar breadth issue exists in the Russell indexes. The Russell 1000 index had a year-to-date return of 16.68% as of June 30. The Russell Top 50 Mega Cap index jumped by 27.82% over the same period.
Small-cap stocks, meanwhile, have not kept up the pace. The Russell 2000 index rose by 8.09% over the same period.
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