{"id":29349,"date":"2023-06-29T19:51:14","date_gmt":"2023-06-29T23:51:14","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/mega-cap-stocks-have-led-u-s-market-rally-so-far-this-year-heres-why-that-could-change-in-the-third-quarter\/"},"modified":"2023-06-29T19:51:16","modified_gmt":"2023-06-29T23:51:16","slug":"mega-cap-stocks-have-led-u-s-market-rally-so-far-this-year-heres-why-that-could-change-in-the-third-quarter","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=29349","title":{"rendered":"Mega-cap stocks have led U.S. market rally so far this year. Here\u2019s why that could change in the third quarter."},"content":{"rendered":"
\n

U.S. stocks have rallied so far this year, mostly led by mega-cap growth stocks, but the situation could change in the third quarter, according to Jonathan Krinsky, managing director and chief market technician at BTIG.<\/p>\n

The large-cap S&P 500
\n SPX,
\n +0.45%<\/bg-quote>
\n and the tech-heavy Nasdaq Composite
\n COMP,
\n -0.00%<\/bg-quote>
\n have gained 14% and nearly 30% so far this year, respectively, while the small-cap Russell 2000
\n RUT,
\n +1.23%<\/bg-quote>,<\/span>
\n which is made up of the smallest 2,000 companies in the broader Russell 3000 by market capitalization, rose only about 7% over the same period, according to FactSet data.<\/p>\n

\n

\u201cAs we head into a new quarter, we think the odds of a significant mean reversion in the value vs. growth trade are quite high,\u201d as the yield of 2-year Treasury
\n TMUBMUSD02Y,
\n 4.870%<\/bg-quote>
\n on Thursday surged to the highest level since early March, Krinsky wrote in a Thursday note. <\/p>\n

Mean reversion refers to an assumption that assets\u2019 prices will tend to revert to the long-term average over time.<\/p>\n

This divergence between growth and value stocks will likely resolve \u201cwith value moving a bit higher and growth moving meaningfully lower,\u201d noted Krinsky. \u201cEssentially, this also suggests that small-caps vs. mega-cap growth should have some decent upside reversion.\u201d <\/p>\n

<\/p>\n
<\/p>\n<\/figure><\/div>\n

Meanwhile, the technical set-up remains for a \u201cmore significant broad-based selloff\u201d in U.S. stocks later this year, Krinsky noted.<\/p>\n

The COBE 6-month implied correlation, an index measuring the average expected correlation between the top 50 stocks in the S&P 500 index, is at the lowest level since 2006.<\/p>\n

\u201cRising correlations should be anticipated in the coming months,\u201d Krinsky wrote. Rising correlations typically correspond with falling equities.<\/p>\n

<\/p>\n
<\/p>\n<\/figure><\/div>\n

U.S. stocks traded mostly higher Thursday, with the Dow Jones Industrial Average
\n DJIA,
\n +0.80%<\/bg-quote>
\n up 0.6% and the S&P 500 up 0.2%. The Nasdaq Composite fell 0.2%, according to FactSet data. <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

U.S. stocks have rallied so far this year, mostly led by mega-cap growth stocks, but the situation could change in the third quarter, according to Jonathan Krinsky, managing director and chief market technician at BTIG. The large-cap S&P 500 SPX, +0.45% and the tech-heavy Nasdaq Composite COMP, -0.00% have gained 14% and nearly 30% so […]<\/p>\n","protected":false},"author":1,"featured_media":29350,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-29349","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nMega-cap stocks have led U.S. market rally so far this year. 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