Bull Market Has Broadened
Published Friday, December 11, 2020 at: 7:51 PM EST
Facebook, Apple, Amazon, Netflix, Google, and Microsoft -- the FAANGM stocks -- were the runaway leaders of the new bull market that began after the Standard & Poor’s 500 bottomed on March 23, but now the rally has broadened. It’s good news.
The S&P 500 is a capitalization-weighted index, which makes the companies with the largest market capitalization more influential in the value of the index of the 500 companies. Over the 12 months ended Dec. 7, the widely-quoted S&P 500 index significantly beat the index of the 500 companies equally-weighted. Recently, that changed. The equal weighted index of the S&P 500 has trounced the market-cap weighted index since the election.
The S&P 500 is not just a measure of stock prices; it’s a measure of the strength of the nation. With the other 494 companies in the S&P 500 catching up to the FAANGM, this shows investors are confident that the broad economy will follow the leadership of the FAANGM.
The Standard & Poor’s 500 stock index closed Friday at 3,663.46. The index declined a fractional -0.13% from Thursday, -0.96% from a week ago, and has gained an astounding +48.33% from its March 23rd bear market low. The broadening of the bull market is a step toward normalcy following the year of the pandemic.
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This article was written by a professional financial journalist for Forrest Financial Services and is not intended as legal or investment advice.
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