View from the Observation Deck

We 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 10/7/24, the S&P 500 Index stood at 5,695.94, 1.15% below its all-time high of 5,762.48 set on 9/30/24, according to data from Bloomberg. The S&P MidCap 400 and S&P SmallCap 600 Indices stood 0.95% and 4.96% below their respective all-time highs as of the same date.

• Large-cap stocks, as represented by the S&P 500 Index, posted total returns of 20.69% on a year-to-date (YTD) basis thru 10/7/24, outperforming the S&P MidCap 400 and S&P SmallCap 600 indices, with total returns of 12.57% and 8.18%, respectively, over the period (see table).
  
  
• Both the S&P 500 and S&P MidCap 400 Indices set new all-time highs in 2024, while the S&P SmallCap 600 Index has yet to recapture its pre-COVID high of 1,466.02 set on 11/8/21.
  
  
• Sector performance can vary widely by market cap and have a significant impact on overall index returns. Two of the more extreme cases in 2023 were the Communication Services and Technology sectors. The Communication Services, Information Technology, and Utilities sectors all exhibit significant variability in performance across market capitalizations so far in 2024.
  
  
• Information Technology and Utilities, the two top-performing sectors in the S&P 500 Index YTD, represented 31.7% and 2.5%, respectively, of the weight of the S&P 500 Index on 9/30/24. By comparison, those sectors represented 9.2% and 2.6% of the S&P MidCap 400 Index, and 11.8% and 2.0% of the S&P SmallCap 600 Index, respectively, as of the same date.
  
  
• As of the close on 10/7/24, the trailing 12-month price-to-earnings (P/E) ratios of the three indices in today’s table were as follows: S&P 500 Index P/E: 24.58; S&P MidCap 400 Index P/E: 17.42; S&P SmallCap 600 Index P/E: 16.94.

Takeaway: Both the broader S&P 500 and S&P MidCap 400 Indices increased to new all-time highs in September 2024, while the record high for the S&P SmallCap 600 Index occurred nearly three years ago on 11/8/21. Combined, the SmallCap and MidCap Indices comprised just 8.1% of the total market capitalization of the S&P 1500 Index as of 9/30/24. The last time (pre-COVID) that small and mid-sized companies accounted for 8.1% or less of the S&P 1500 Index’s market capitalization was on 4/28/00. Since then, the S&P MidCap 400 and S&P SmallCap 600 Indices notched average annual total returns of 9.44% and 9.45%, respectively, (4/28/00 thru 10/7/24). For comparison, the average annual total return of the S&P 500 Index was 7.75% over the same period.

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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