The S&P 500 is witnessing a shift as smaller stocks gain momentum, indicating a broader market rally beyond the influence of its largest constituents. This trend is evident in the equal-weighted S&P 500, which has seen increased investor interest, suggesting a potential mean reversion. Smaller stocks that previously lagged are now advancing, while major players like Apple and Nvidia experience declines. The advanced-decline line has surpassed 200 for the fourth consecutive trading day, highlighting robust market breadth and optimism. This rotation from large-cap to smaller-cap stocks may be driven by valuation concerns or strategic reallocation by investors, as they brace for anticipated market volatility.
The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.79% to $179.18 at 15:40 on Thursday, January 16.