Magnificent 7 Stocks Led Market Gains in 2023, But Broader Leadership May Emerge
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The "Magnificent 7" stocks accounted for most S&P 500 gains in 2023, with 107% returns.
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The equal-weighted S&P 500 underperformed the market-cap S&P 500 by 12% in 2023, showing narrow leadership.
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Since October, the equal-weighted index has outperformed the Magnificent 7, suggesting broadening leadership.
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Small caps may outperform as recession fears fade and the Fed starts rate cuts.
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The valuation gap between small and large caps remains wide, presenting an opportunity.