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Asset Management Viewpoints: Breadth Breakout

By Thomas O. Herrick
Chief Market Strategist, Managing Director

A major characteristic of 2023’s equity market has been narrow, concentrated performance centered around the famed “magnificent 7” stocks, a handful of mega-cap technology companies. Along with yields, the key to 2024 equity performance will be breadth expansion. There are some early signs that heighten the odds of wider participation, including breakouts in the S&P 500 advance-decline line and small caps versus large caps. Both are supportive of major averages and broader participation in 2024.

Small companies are starting to get some traction.

Bloomberg Cumulative Advance-Decline Line for the S&P 500 Graph
Source: Bloomberg Finance

Russell 2000 Index vs. S&P 500 Index Graph
Source: Fairlead Strategies

 


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Any opinions expressed here are those of the authors, and such statements or opinions do not necessarily represent the opinions of Cary Street Partners. These are statements of judgment as of a certain date and are subject to future change without notice. Future predictions are subject to certain risks and uncertainties, which could cause actual results to differ from those currently anticipated or projected.

These materials are furnished for informational and illustrative purposes only, to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. Materials have been compiled from sources believed to be reliable; however, Cary Street Partners does not guarantee the accuracy or completeness of the information presented. Such information is not intended to be complete or to constitute all the information necessary to evaluate adequately the consequences of investing in any securities, financial instruments, or strategies described herein.

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We undertake no duty or obligation to publicly update or revise the information contained in these materials. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. You should not view the past performance of securities, or information about the market, as indicative of future results.

Fixed income investments have several other asset-class specific risks. Inflation risk reduces the real value of such investments, as purchasing power declines on nominal dollars that are received as principal and interest. Interest rate risk comes from a rise in interest rates that causes a fixed income security to decline in price in order to make the market price-based yield competitive with the prevailing interest rate climate. Fixed income securities are also at risk of issuer default or the markets’ perception that default risk has increased. CSP2023208


 

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