The Comeback Kids

A growing number of stocks are having their moment in the sun.

Everybody loves a good comeback story: Seabiscuit. The Mighty Ducks. 493 stocks in the S&P 500 index.

The majority of the S&P 500’s recent returns were driven by the so-called Magnificent 7—the small group of mega-cap tech stocks such as Nvidia and Apple. Meanwhile, many of the remaining 493 stocks in the index have struggled to gain meaningful ground.

But the tide has begun to turn in recent weeks, with a growing number of stocks and market sectors overtaking that select group of leaders (at least in the short term).

The result: The equal-weighted version of the S&P 500 index is up 3.3% for the month of July* compared to the market-cap-weighted version, marking the largest monthly outperformance since late 2020 (see the chart). Many investors are cheering this shift, as it gives the overall market a broader foundation of strength for potential future gains.

S&P 500 Equal-Weight Versus Market-Cap-Weight Performance

S&P 500 Equal-Weight Versus Market-Cap-Weight Performance

Source: Bloomberg, calculations by Horizon Investments, as of July 29, 2024. Past performance is not indicative of future results. Indices are unmanaged and do not have fees or expense charges, both of which would lower returns. It is not possible to invest directly in an index.