Another closely watched index is set to hit a new record close.
The S&P 500 Equal-Weight Index (^SP500EW) is on track to achieve its first record closing level since January 2022.
While the traditional S&P 500 (^GSPC) is market-cap weighted, meaning that a few large stocks have a large impact on the index's performance, the equal weight index values all 500 stocks in the index equally.
As Goldman Sachs' equity strategy team highlighted in Yahoo Finance's Charbook last January, this has led to significant gains for the market-weighted index and a lower valuation for the equal-weighted index.
Many on Wall Street believe this could lead to a broader stock market rally, rather than a few “hot” stocks dominating the gains. Thursday's market action is the latest sign that the narrative may be paying off.
“‘Tightness’ of the market — that is, only a handful of stocks are doing all the work — is no longer an accurate reading of things,” Ross Mayfield, an investment strategist at Baird, wrote in a March 1 note to clients.
This could be crucial to the stock market's rally in 2024 as hiccups develop in the seven brilliant trades, most recently with slices of Apple (AAPL) and Tesla (TSLA). Strategists believe there could be strength in other areas if the market finds support in the event of a lag in technology trading.
“The strength that we're seeing in the economy and in corporate America is a much broader base than just AI trading, which has gotten a lot of attention recently,” Ben Snyder, an equity analyst at Goldman Sachs, told Yahoo Finance, noting the broad base of earnings growth. Seen during Q4 reports.
Oppenheimer's John Stoltzfus suggested a similar point in a weekly note to clients on Sunday. He highlighted building broad-based strength as why he doesn't think the rally is over.
“There is likely room for further expansion of the stock market rally this year and a chance to see stocks climb the proverbial wall of anxiety,” Stoltzfus wrote.
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