Growing Market Breadth Is The Latest Boost To The S&P 500’s Epic Climb

Growing Market Breadth Is The Latest Boost To The S&P 500’s Epic Climb
Andrew Rummer

over 2 years ago1 min

Mentioned in story

As the US stock market rebounds from September’s swoon to reach a new all-time high, investors are taking comfort from the S&P 500’s renewed breadth of gains.

Market watchers tend to get twitchy when gains in the stock market are driven by just a few stocks – as we saw for much of the post-pandemic rally, when tech giants like Alphabet and Microsoft grew to account for a larger and larger proportion of the S&P 500. 

But – thankfully – the chart above shows how October’s gains have been accompanied by growth in Bloomberg’s Cumulative-Advance Decline Index, an indicator of how many of the S&P 500’s members are individually rising or falling.

As we get into the busiest weeks of the third-quarter earnings season – with more than 80% of S&P 500 members so far reporting better-than-expected profits – this weakening reliance on a handful of stocks to fuel gains bodes well for the S&P 500’s future.

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