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A record share of S&P 500 stocks have underperformed the index in 2023 as ‘weirdest bull market in decades’ marches on


The S&P 500 index is closing in on a fresh record high as 2023 draws to a close. Unfortunately for stock pickers, many of the index’s constituents remain well below their highs from January 2022.

This has led to a striking divide between the U.S. market’s “haves” and “have nots,” a dynamic that has resulted in what eToro’s Callie Cox recently described as “the weirdest-looking bull [market] in decades.”

Both Cox and Apollo’s Torsten Slok have been closely tracking the share of S&P 500
members that have been underperforming the index. And on Wednesday, Slok pointed out in emailed commentary that at 72%, the share of S&P 500 underperformers is on track for a record in 2023.


To be sure, this divergence is nothing new. So-called “bad breadth” in the U.S. stock market has been a hot topic on Wall Street practically all year.

Many analysts have expressed concern that the U.S. market has become too top-heavy as a handful of megacap stocks, nicknamed “the Magnificent Seven” by CNBC’s Jim Cramer and a coterie of analysts, drove virtually all of the index’s gains, spurred by the artificial-intelligence boom.

See: One of the biggest problems plaguing the U.S. stock market is getting worse as selloff continues

Members of this select group include Apple Inc.
Nvidia Corp.
Tesla Inc.
, Inc.
Microsoft Corp.
Alphabet Inc. and Meta Platforms Inc.

Due to this lopsided performance, the S&P 500 has beaten its equal-weight sibling by more than 12 percentage points so far this year.

As of Wednesday morning in New York, the S&P 500 had risen 24.4% in 2023 to trade at 4,777, according to FactSet data, just shy of its record close from Jan. 3, 2022.

Meanwhile, the Invesco S&P 500 Equal Weight ETF
which tracks the equal-weight index, was up just 11.8% at $158.07 a share.

For what its worth, RSP is on the verge of a “golden cross” as its 50-day moving average nears its 200-day moving average, as many of the market’s laggards have narrowed the performance gap with traders pricing in multiple Federal Reserve interest-rate cuts in 2024.

The Nasdaq-100
has fared even better, having risen more than 54% in 2023, according to FactSet data.

2024 could turn into a ‘trader’s market.’ Here’s how this strategist says you can make the most of that.

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