The stock market rally in the first quarter of the year saw a broader participation from various stocks, which helped offset some weaknesses in Big Tech. Analysts are optimistic that this trend will continue, indicating a sustained rally.
Data from Carson Group’s Ryan Detrick revealed that the number of S&P 500 stocks trading at 52-week highs reached a three-year high of 118, signaling an improvement in market breadth. Additionally, a significant percentage of index members are in long-term uptrends, with over 83% trading above their 200-day moving average, the highest since August 2021.
While Big Tech stocks have historically played a major role in driving market gains, their influence has diminished compared to previous years. The top seven tech stocks, including Apple, Tesla, and Alphabet, accounted for 37% of the S&P 500’s first-quarter gain, down from two-thirds in 2023. However, excluding these three stocks, the remaining four – Nvidia, Microsoft, Meta Platforms, and Amazon – contributed significantly to the market’s performance.
Despite the recent underperformance of some Big Tech giants, the S&P 500 still achieved its 22nd record closing high of 2024. This was supported by the strength of cyclical sectors like industrials, financials, and energy, which outperformed the index in the first quarter.
DailyBubble sees the expansion of market leadership beyond Big Tech as a positive development for the market rally. The rotation into cyclical sectors indicates a healthy market trend, with sectors like financials, industrials, and materials hitting record highs in 2024. This diversification bodes well for the overall market performance.
Looking ahead, analysts are keeping an eye on small- and midcap stocks, expecting them to regain momentum as the Federal Reserve considers interest rate cuts. While midcap stocks have performed well, small-caps have lagged behind but could see a boost with supportive monetary policies.
Overall, the market outlook remains positive, with various sectors contributing to the rally and the potential for further growth in different segments. DailyBubble believes that a diversified market, with a mix of tech and cyclical stocks thriving, is a healthy sign for sustained market gains.