Displaying items by tag: s&p

Friday, 15 March 2024 04:13

Is the Stock Market Rally Nearing Exhaustion?

2024 has seen the stock market make 17 closing, all-time highs. Despite this strength, many are noting some reasons to be cautious about equities due to some concerning developments under the surface.

 

In essence, the strong performance of the indexes and mega-cap technology stocks is masking hidden weakness. This is reflected in the Dow Jones Transportation Average failing to confirm the new highs of the Dow Jones Industrial Average which is a ‘non-conformation’ according to Dow Theory. Dow Theory warns that a new high by the Industrials but not by transportation stocks is prone to failure. Similarly, riskier parts of the market like high-yield bonds and high-beta stocks are also underperforming Treasuries and low volatility stocks, respectively. 

 

The leader of this bull market has been technology due to excitement around AI and strong earnings growth from leading tech companies. However, there are signs of exhaustion as the relative ratio of the S&P 500 tech sector has failed to confirm the breakout in the S&P 500. According to David Rosenberg, the founder and President of Rosenberg Research, “These were the most important stocks for the market, and no longer look to be in control.” He believes that the longer these measures fail to confirm the new highs in the S&P 500, the larger the risk of a reversal. 


Finsum: 2024 has been a strong year for the stock market with the S&P 500 making new highs. Yet, there are some signs that the rally may be nearing exhaustion. 

 

Category: Eq: Total Market 

Keywords: #S&P 500; #bull market; #tech; #equities; #risk; 

Published in Eq: Total Market

Last week, the Nasdaq made an all-time high pushing past its previous highs from January 2022. This was before the Federal Reserve embarked on an aggressive campaign of rate hikes to curb inflation. In one respect, the tech-heavy Nasdaq is playing catch-up with the S&P 500 which has been setting new record highs over the last couple of months and is now more than 10% above its January 2022 levels.

 

While a major component of these advances is due to the strength in the 7 largest technology stocks and frenzy around the AI boom, it’s worth noting that the equal-weighted indices for the Nasdaq and S&P 500 also made new, all-time highs as well. It’s an indication that the bull market is expanding in terms of participation. It also leads to the conclusion that the market is strong from a bottom-up perspective as well.

 

Another way to assess the market’s strength from a bottom-up perspective is corporate earnings. With Q4 earnings season nearly in the books, it’s clear that earnings remain robust despite a host of macro headwinds. So far, 97% of S&P 500 companies have reported. 73% topped earnings expectations, while 64% exceeded revenue estimates. Overall, earnings were up 4% compared to last year, marking the second consecutive quarter of earnings growth, validating the bullishness of investors. 


Finsum: The stock market is making all-time highs consistently in 2024. The strength goes beyond the ascendant tech sector as equal-weighted indices are hitting new highs, while corporate earnings continue to grow despite an array of headwinds. 

Published in Eq: Total Market

Portfolio management and trading platform Vestmark recently announced that it has launched six separately managed account investment strategies, the firm’s first asset management offering. The strategies, called "Focused Index Portfolios,” follow S&P Dow Jones Indices, but in an SMA wrapper to allow for some customization and tax-loss harvesting. Robert Battista, senior vice president, and managing director of Vestmark Advisory Solutions said that the firm sees the launch as a first step toward a fully personalized direct indexing investment platform which Vestmark expects to roll out later in the year. The portfolios have minimums as low as $100,000, with fees comparable to an ETF. Three of the Index Portfolios are based on custom indices Vestmark built with S&P Dow Jones, including the S&P 500 Focused 100 VAST Portfolio, the S&P 500 Focused 50 VAST Portfolio, and the S&P 500 Catholic Values Focused 100 VAST Portfolio. The other three strategies are based on existing indices such as the Dow Jones U.S. Dividend 100 VAST Portfolio, the S&P 500 ESG Elite VAST Portfolio, and the S&P Developed Markets 100 ADR xUS VAST Portfolio. For now, the new strategies are available in the Vestmark Manager Marketplace, but Vestmark plans to distribute them to broker/dealers, independent advisors, and RIAs via a new sales team dedicated to the company's direct indexing services.


Finsum:Trading platform Vestmark launched six index portfolios as the firm's first step towards a fully personalized direct indexing investment platform which is expected later in the year.

Published in Wealth Management

Based on research by S&P Global Market Intelligence, more than half of U.S. equity REITs reported third-quarter funds from operations (FFO) that exceeded sell-side analyst expectations. S&P analyzed 127 U.S. REITs and found that 71 reported FFO per share higher than third-quarter consensus estimates. Out of the remaining REITs, 24 equaled consensus expectations for the quarter and 32 fell short of FFO expectations. The research covered U.S. equity REITs that trade on the Nasdaq, NYSE, and NYSE American, have market caps over $200 million, and have had three or more FFO-per-share estimates for the three months ending on September 30th. The top industries that outperformed were industrials and self-storage, with 9 out of the 11 industrial REITs surpassing analyst FFO-per-share estimates during the quarter. One notable self-storage REIT was Americold Realty Trust Inc., which reported a core FFO of 25 cents per share, 31.6% above its consensus estimate. Out of all the industries, the largest beat was Safehold Inc., which more than doubled its estimate of 42 cents per share.


Finsum:REITs had a strong quarter with 56% reporting third-quarter funds from operations that outperformed sell-side analyst expectations.

Published in Eq: Real Estate
Thursday, 08 December 2022 16:14

Big ESG Funds Underperforming the S&P 500

ESG seems to be getting battered by all sides. Not only do ESG funds have to deal with regulators bearing down on their messaging and politicians questioning their purpose, but performance has also been an issue, especially this year. According to a new Bloomberg article, the 10 largest ESG funds by assets have all posted double-digit losses, with eight of them underperforming the S&P 500. This includes the iShares ESG Aware MSCI USA ETF (ESGU) which has $20.7 billion in assets and the Vanguard ESG US Stock ETF (ESGV) which currently has $5.9 billion in AUM. The worst performer so far has been the Brown Advisory Sustainable Growth fund (BAFWX) which was down 28.1% year to date as of Dec 5th. Poor performance in BAFWX can be attributed to a chunk of the portfolio being in software, semiconductor, and internet stocks, which have been hit hard this year due to rising interest rates, inflationary concerns, and the possibility of a recession. However, despite the bad performance, money continues to flow into ESG funds. A recent study by Harvard Business School professors found that investors are willing to accept lower returns in exchange for the societal benefits of ESG.


Finsum:Despite underperforming the S&P 500, large ESG funds continue to see inflow as investors are willing to accept lower returns in exchange for the benefits ESG provides society.

Published in Wealth Management
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