2Q 2017 Market Commentary

The markets continued to march higher into the 2^nd quarter.  With the strong finish, it marked the eighth straight month of gains for the Dow Jones Industrial Average.  The Dow is now enjoying a rise of 8.0% for the year while the S&P 500 is up 8.2%.

While those two indices have had impressive returns so far, The NASDAQ has been the clear leader.  The index is up 14.1% on the year but the bulk of the gains have come from the largest companies as illustrated by the 16.1% return in the NASDAQ 100 which is made up of the 100 largest NASDAQ listed companies.  Drilling down even further, the five largest capitalization stocks in the NASDAQ and their Year-To-Date performance are as follows:

 

Company	Market Cap*	YTD Performance		NASDAQ 100 Weight
Apple	$            750.9	24.3%		11.5%
Alphabet	$            634.4	18.0%		9.3%
Microsoft	$            532.2	10.9%		8.2%
Amazon	$            462.7	29.4%		7.2%
Facebook	$            437.6	29.8%		5.5%
Total	$        2,817.7	22.5%**		41.7%
* Billions
** Average

 

These five stocks alone make up over 40% of the NASDAQ 100.  Their returns dwarfed the returns of the NASDAQ 100 Index and thus the other 95 members of the index.

 

Company	Market Cap*	YTD Performance		NASDAQ 100 Weight
Other 95	$        4,831.9	6.7%**		58.3%
* Billions
** Average

 

Indices don’t always tell the story but understanding how things are calculated can certainly help investors navigate what is really happening in the markets.  The leaders, by definition, always lead the market…in this market, it seems as if the leaders are distorting the perception of the returns of the “average” stock.