INVESTMENT COMMENTARY & Outlook
July 2023
The breadth and power of the overall stock market improved notably in the second quarter. At the end of April, only eight NASDAQ stocks accounted for virtually all the S&P 500’s year-to-date return. At the end of May, twenty stocks accounted for virtually all the S&P 500’s year-to-date return as breadth and power improved. Then the annual June Russell reconstitution caused many small cap stocks to surge as liquidity improved.
The NASDAQ 100 (NDX) recently reduced the weight of its seven largest stocks by market capitalization and the other 93 stocks in the NDX index were the beneficiaries. The bottom line is the breadth and power of the overall stock market continues to improve as investor confidence and economic growth persists. The Fed signaled in its FOMC statement that it is effectively done raising key interest rates as inflation cools and as Treasury yields settle down.
We are now in the midst of the second-quarter earnings announcement season. Already many of our portfolios are exhibiting relative strength, which is a sign that money is gravitating to those companies that will post the strongest quarterly results and guidance. We are in the midst …