How far below their 52-week high are S&P 500 constituents?
Source: Bloomberg, as of September 10, 2020.
- U.S. stocks have staged a powerful recovery in 2020, rising more than 50% off their March lows and turning in a YTD return of approximately 6.6%.1
- Beneath the surface, however, the rally has been narrow and uneven. The largest technology stocks – also the largest constituents of the S&P 500 – are up approximately 85% from their lows while the median stock in the S&P remains in negative territory YTD.2
- The chart highlights the limited nature of the S&P 500’s performance over the past year. Nearly all of the index’s constituents remain below their 52-week high.3 While 31% of S&P constituents are within 10% of their 52-week high, nearly half (44%) are off by 20% or more.3
- Investors were reminded this week of the fragile nature of a recovery driven by a single sector, or even by the largest companies within that sector. The tech-heavy Nasdaq fell into correction territory within just three days last week, while the S&P 500 has fallen nearly 7% since September 2. Against this backdrop, investors may consider alternative sources of diversification to combat the concentration risk inherent in many traditional stock indexes today.