The S&P 500 has managed to tread water in March despite the collapse of three U.S. banks and lingering worries about deposit flight from other regional lenders. But beneath the surface, signs of equity-market weakness abound.
But the performance of the large-cap S&P 500 doesn’t reflect weakness in small-cap stocks and cyclical names, which haven’t held up nearly as well as the largest U.S. stocks by market capitalization.Keith Lerner, chief market strategist at Truist, illustrated this dichotomy in performance between the biggest U.S.-traded stocks and the rest of the market in a note shared with clients and MarketWatch on Monday.
To wit, gauges of small- and midcap U.S. stocks have fared far worse than the S&P 500 SPX . Through Friday, the S&P 500 was down 0.5% since March 8, according to Truist. But the S&P Midcap 400 index had fallen by 7% during the same period, while the S&P SmallCap 600 index was down 7.4%. Looking ahead, Lerner expects this dichotomy in performance to persist as investors grapple with the increasing likelihood of a recession beginning before the end of 2023.
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