Tranel Talks Column

Market Status Update – 8/12/20

We’re back with another market update. This time we’ll be covering the week of August 3 – August 7, 2020.

  • DJIA – up 3.9%
  • S&P 500 – up 2.5%
  • NASDAQ – up 2.5%

The S&P 500 moved positive for the 5th time in the last 6 weeks and is within 1% of the record high set earlier in the year, while the NASDAQ surged past its record set just a week prior and eclipsed 11,000 for the first time ever, on Thursday. Recent technology earnings have continued to push the major indexes forward despite a continued surge in COVID-19 cases and congress failing to come to an agreement yet on another stimulus package.

For the year, market returns are as follows:

  • DJIA – down 2.5%
  • S&P 500 – up 4.9%
  • NASDAQ – up 23.4%

The overall disparity between the markets is somewhat remarkable considering the economic slowdown resulting from the global pandemic. A deeper dive into this disparity does reveal a rather troubling sign for the economy as a whole and how the stock market rally has impacted investor sentiment.

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If we look at the top 5 largest companies in the S&P 500, their average return year-to-date is roughly 36%, beating all of the major indexes. However, if we remove those 5 companies from the S&P 500, the remaining 495 companies have an average return, year-to-date, of –7.74%. This disparity is largely a result of the sheer size of the aforementioned top 5 largest companies. Those holding represent 21% of the index market share while only representing 1% of the actual index. While returns are ticking up across the board, the recovery has been much slower than what the top line numbers suggest.

Thanks for tuning in to this week’s market update! If you have any questions or would like to discuss recent stock market events in more detail, feel free to contact us.

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