Did you know that over 90% of the returns in the S&P 500 this year have come from only 10 stocks? The equal weighted S&P 500 is actually flat year-to-date and has struggled to move higher since the failures of Silicon Valley Bank (SVB) and Signature Bank. Small- and mid-cap companies were market leaders to start the year, however, they’ve given back most of their gains this year. The market is currently led by a handful of the largest market cap weighted companies in the index, which is what has allowed the S&P 500 to remain at its current levels.

Investors have looked to these names as a flight to safety ahead of the negotiations surrounding the debt ceiling and to see if the Fed is in fact going to pause raising rates when they meet in June. The reason investors are piling into these few names is due to their balance sheet and their future growth prospects, regardless of economic conditions. While we navigate through these times, we expect to remain in a tight trading range in the equity markets. However, under the surface, we are still seeing positive money flows which tells us if investors get good news, the market should broaden. As the Lonely Bull always says, “Stay steady my friends!”

Scott Wohlers, President

For the Lonely Bull