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Stock Market Rally Broadened In Past Three Months

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(Tuesday, Oct. 13, 2020; 10:30 PM EST) The six tech giants that have dominated stock performance in 2020 were less dominant over the last three months. The stock market rally broadened.

The stock market's performance was almost entirely determined by six companies in the S&P 500 in the first nine months of 2020: Facebook, Amazon, Apple, Netflix, Google, and Microsoft (FAANGM).

However, in the last three months, the 494 other companies in the Standard & Poor's 500 index outside of the FAANGM, kept up with the FAANGM.

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Note the gap between the indexes, with the market-capitalization weighted S&P 500 far outperforming an equal-weighted index of the same 500 companies.  This gap was unusual, out of line with the historic norm.

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However, the performance gap between the market-cap weighted S&P 500 and the equal-weighted S&P 500 closed last quarter.

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While the six giant tech companies often referred to as the FANG stocks on the S&P 500 performance have probably not been defanged, the broadening of the stock market rally in the past three months to the other 494 companies in the index may make the stock market a bit less frightening.

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