Beaten-Down Stocks Get Some Revenge After Big Tech’s 2023 Rally

Stock investors are turning to roughed-up corners of the market from small caps to value shares as they seek out bargains with the S&P 500 Index riding a five-week winning streak and soaring almost 9% since the start of November.

To see it, look at the S&P 500 Equal Weight Index, which is up more than 10% since Oct. 31 compared with the S&P 500’s 8.9% rise. In December, the equal weight version of the S&P is up 1.1% while the regular index is flat. It’s still early, but that holds it would be the second-best month relative to the broader benchmark index since October 2022, according to data compiled by Bloomberg.

Broadening Breadth

The move comes as the seven largest stocks in the S&P 500 by market value — Apple, Microsoft, Google parent Alphabet Inc., Inc., Nvidia Corp., Tesla Inc. and Facebook owner Meta Platforms Inc. — waffle after dominating the market for most of 2023. Combined they account for more than a quarter of the index’s weight.

Much of the optimism for stocks more broadly is coming from investors’ expectations that the Federal Reserve is done with its interest rate hikes to tame inflation and will cut rates in 2024.