S&P 500 Hits New High Despite Tech Rotation Causing Volatility
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The performance gap between the equal-weighted S&P 500 index and the market cap-weighted index has narrowed over the past 3 weeks, indicating a rotation out of tech stocks into the broad market.
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This rotation involves movement of trillions of dollars and is a net positive, but could lead to a larger correction than we've seen recently.
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The S&P 500 hit a new all-time closing high last week even as it declined for 2 straight weeks, an unusual occurrence.
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Historically corrections have tended to be 3-5%, with 10% drops being rare, but we saw a 10% drop last year from July 31 to October 27.
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Fed Chair Jerome Powell's comments this week could increase volatility, as he has been oscillating between dovish and hawkish remarks that swing markets.