Free Trial

New Leaders Emerge: S&P 500 Shows Shift in Top Performers

S&P 500 stocks to watch

Key Points

  • This year, a few mega-cap tech stocks dominated the market, but since late May, other stocks have been rotating into leadership. 
  • Cruise line companies, Carnival and Royal Caribbean rank third and fourth in YTD S&P 500 performance, with returns of 129.40% and 119.64%, respectively.
  • Tesla, PulteGroup, Align Technology, Palo Alto Networks, Norwegian Cruise Line, and General Electric also make the top performers list.
  • The equal-weighted S&P 500 index shows how smaller companies contribute to the market's overall performance.
  • Increased market breadth signals broad confidence and positive sentiment, contributing to a potentially more sustainable market rally.
  • Five stocks we like better than Align Technology.
Remove Ads

It wasn’t that long ago that the “Magnificent 7” stocks, Apple Inc. NASDAQ: AAPL, Microsoft Corp. NASDAQ: MSFT, Nvidia Corp. NASDAQ: NVDA, Tesla Inc. NASDAQ: TSLA, Amazon.com Inc.  NASDAQ: AMZN, Alphabet Inc. NASDAQ: GOOGL and Meta Platforms Inc. NASDAQ: META were pretty much the only game in town. 

Since late May, other stocks have been rotating into leadership.

As of July 31, the top S&P 500 performers and their year-to-date returns were:

That’s quite a different list from the one you would have seen a couple of months ago. In particular, as cruise lines sail to higher prices, the makeup of S&P top performers is changing. 

Remove Ads

Equal-Weighted S&P As Gauge Of Breadth

One informative way to slice and dice the performance of S&P internals is by comparing the performance of the equal-weighted index with the traditional market-cap weighted.

As its name implies, the S&P 500 equal-weighted index assigns an equal weighting to each constituent, providing a balanced representation of all included stocks. That means no component, regardless of its market capitalization, has outsized influence over index performance. 

This approach tends to tilt the index toward the smaller holdings, which are frequently more volatile than the mega-caps that dominate the market-cap-weighted index. That volatility isn’t necessarily a bad thing, as it can, at times, lead to outperformance. 

You can track the S&P equal-weighted index with the Invesco S&P 500 Equal Weight ETF NYSEARCA: RSP

While the equal-weighted index can provide a more diversified representation of components, giving smaller companies an equal sway as larger ones and potentially reducing concentration risk, the traditional market-cap weighted index is still outperforming by a wide margin.

Not Unusual To See Performance Divergence

So far this year, the market-cap-weighted S&P 500 is outpacing the equal-weighted index by 97%. It’s not necessarily unusual to see that disparity at this juncture; there’s generally a cyclical nature to the indexes’ returns, as the market-cap weighted tends to outperform as the market is rebounding, as is happening this year. 

Still, the performance of the equal-weight index offers one more data point to support the case that breadth is returning to markets.

A look at the Invesco S&P 500 Equal Weight ETF’s chart shows the fund is within a whisker of clearing a base that began in early February. 

So what does the performance of equal-weighted S&P leaders mean for market breadth? 

How Smaller Companies Contribute To Index Return

The equal-weighted index shows how smaller companies are contributing to the overall market; as their performance improves, as we’re clearly seeing with the cruise lines, they frequently bring other industry peers along with them. To use a cliche that’s appropriate in this case: A rising tide can lift all - or at least other - boats.

Stock market breadth is considered bullish when many stocks across various sectors and market capitalizations participate in an uptrend. 

A broad-based rally indicates a healthy market as more companies see positive price movements, reflecting overall investor optimism. 

Greater Breadth Suggests Greater Confidence

A high degree of market breadth suggests broad confidence and positive sentiment, often indicating a robust and more sustainable rally. It also signifies that multiple industries and companies are contributing to the market's strength, making it less reliant on the performance of a few heavily-weighted stocks or sectors. 

It’s that latter point that has made investors nervous all year, even as AI, cloud computing and electric vehicles sent some stocks on rocket rides. 

While it’s certainly possible the market will see a pullback before year’s end, it’s statistically unlikely that 2023 will be a down year in the market. Historically, down years are most often followed by a year with S&P 500 price gains. 

Increased breadth only makes that likelihood stronger, as it’s not up to just big techs to carry the entire market on their backs. 

Should You Invest $1,000 in Align Technology Right Now?

Before you consider Align Technology, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Align Technology wasn't on the list.

While Align Technology currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

The 10 Best AI Stocks to Own in 2025 Cover

Wondering where to start (or end) with AI stocks? These 10 simple stocks can help investors build long-term wealth as artificial intelligence continues to grow into the future.

Get This Free Report
Kate Stalter
About The Author

Kate Stalter

Contributing Author

Retirement, Asset Allocation, and Tax Strategies

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Align Technology (ALGN)
4.5689 of 5 stars
$163.98+3.7%N/A29.23Moderate Buy$262.64
Alphabet (GOOGL)
4.6117 of 5 stars
$157.040.0%0.51%19.51Moderate Buy$209.49
Amazon.com (AMZN)
4.9259 of 5 stars
$196.01+2.0%0.10%35.44Moderate Buy$260.53
Apple (AAPL)
4.4397 of 5 stars
$223.89+0.3%0.45%35.54Moderate Buy$245.52
Carnival Co. & (CCL)
4.9765 of 5 stars
$20.00+3.1%10.00%14.39Moderate Buy$26.89
General Electric (GE)
4.5226 of 5 stars
$199.80-2.0%0.72%33.36Moderate Buy$211.31
Microsoft (MSFT)
4.9387 of 5 stars
$382.140.0%0.87%30.77Moderate Buy$508.86
Norwegian Cruise Line (NCLH)
4.7157 of 5 stars
$19.55+2.6%N/A17.94Moderate Buy$28.28
Royal Caribbean Cruises (RCL)
4.9786 of 5 stars
$212.17+1.9%1.41%19.85Moderate Buy$279.58
Tesla (TSLA)
4.5774 of 5 stars
$282.76+5.3%N/A138.61Hold$317.75
Invesco S&P 500 Equal Weight ETF (RSP)N/A$174.86+0.8%1.61%21.02Moderate Buy$174.86
NVIDIA (NVDA)
4.8889 of 5 stars
$110.42+0.2%0.04%43.46Moderate Buy$171.51
Compare These Stocks  Add These Stocks to My Watchlist 

Remove Ads

Featured Articles and Offers

Recent Videos

Donald Trump Owns These 7 Stocks, Should You?
 5 Stocks to BUY NOW in April 2025
3 Bank Stocks Defying Market Turmoil—Cheap Options Trades!

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines

Remove Ads