View from the Observation DeckWe update today’s table on a regular basis to provide insight into the variability of sector performance by market capitalization. As of the close on 12/29/23, the S&P 500 Index stood just 0.56% below its all-time closing high, according to data from Bloomberg. The S&P MidCap 400 and S&P SmallCap 600 Indices stood 4.44% and 10.08% below their respective all-time highs.
Takeaway: As today’s table reveals, market performance can vary widely across market capitalizations and sectors. In 2023, Information Technology and Communication Services were the top performing sectors in the S&P 500 Index, accounting for over 70% of the index’s total return during the year. The S&P MidCap 400 and S&P SmallCap 600 Indices also had sectors that clearly outperformed their peers, but none to the level of those in the S&P 500 Index. That said, the table fails to capture a notable change that occurred over the last two months of the year. In November and December alone, the MidCap and SmallCap Indices rose by a staggering 17.96% and 22.08%, respectively, on a total return basis. For comparison, the two-month total return in the LargeCap Index was 14.08%. In addition, the total return of the S&P 500 Equal Weight Index was 16.61% over the same period (not in table). While two months does not make a trend, this data could be a signal that investors are finding value outside of the narrow market of the past year. Over the 10-year period ended 12/29/23, the average monthly P/E ratios for the three indices in today’s table were as follows: S&P 500 Index: 20.67; S&P MidCap 400 Index: 21.25, and S&P SmallCap 600 Index: 25.22, according to data from Bloomberg. As of market close on 12/29/23 the P/E ratios for those indices stood at 22.94, 17.86, and 16.34, respectively. This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is an unmanaged index of 500 companies used to measure large-cap U.S. stock market performance. The S&P MidCap 400 Index is a capitalization-weighted index that tracks the mid-range sector of the U.S. stock market. The S&P SmallCap 600 Index is a capitalization-weighted index that tracks U.S. stocks with a small market capitalization. The S&P 500 Equal Weighted Index is the equal-weight version of the S&P 500 Index. The 11 major sector indices are capitalization-weighted and comprised of S&P 500, S&P MidCap 400 and S&P SmallCap 600 constituents representing a specific sector.
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