S&P 500 poised for new record with Powell back in spotlight

Another closely followed index is set to make a new record close.

The S&P 500 equal-weight index (^SP500EW) is on track for its first record-high close since January 2022.

While the traditional S&P 500 (^GSPC) is market-cap weighted, meaning a few large stocks have an outsized impact on the index’s performance, the equal-weight index values all 500 stocks in the index equally.

As Goldman Sachs equity strategy team highlighted in Yahoo Finance’s Charbook back in January, this led to outsized gains for the market-weighted index and a lower valuation for the equal-weighed index.

Many on Wall Street believed this could lead to a broadening out of the stock market rally, rather than a few “magnificent” stocks dominating gains. And Thursday’s market action is the latest sign that narrative may be coming to fruition.

“Market “narrowness” – i.e., only a handful of stocks doing all the work – is no longer an accurate read on things,” Baird investment strategy analyst Ross Mayfield wrote in a note to clients on March 1.

This could be crucial for the 2024 stock market rally as hiccups in the magnificent seven trade develop, most recently with slides from Apple (AAPL) and Tesla (TSLA). Strategists believe strength in other areas could be were the market finds support if the tech trade lags.

“The strength we’re seeing in the economy and in corporate America is much broader base than just the AI trade that has captured so much attention recently,” Goldman Sachs equity analyst Ben Snider told Yahoo Finance, pointing to the wide base of earnings growth seen during fourth quarter reports.

Oppenheimer’s John Stoltzfus proposed a similar point in a weekly note to clients on Sunday. He highlighted the building broad-based strength is why he doesn’t think the rally is over.

“There’s likely room for a further broadening of this year’s stock market rally and opportunity to see equities further climb the proverbial wall of worry,” Stoltzfus wrote.