Rotation Underway
In last night’s Closer, we provided an analysis we frequently run to help identify trends within price action: our decile analysis. This analysis ranks S&P 500 members by a variety of metrics, placing them into ten equal sized groups. We then show the average performance for each group. As might be expected, this week’s rebound in equity prices has been largely rotational following weakness after “Liberation Day”. The chart below shows the average performance for S&P 500 members since Monday’s close for deciles of performance from Liberation Day through Monday’s low. As shown, the deciles of stocks that had been the worst performers for most of April have shifted to the top performers on average in the past few days. Meanwhile, the few stocks that had risen from April 2 to Monday have continued to average a gain, although that move higher has been much more modest.
To give some more color to the range of returns earlier this month, below we show those same deciles, except instead of performance since Monday, each bar shows those deciles’ average performance from Liberation Day through Monday’s close. As shown, the index’s 50 worst performers averaged a decline of over 20% decile during that time, and deciles 2 through 4 also all experienced average declines of at least 10%. On the other end of the spectrum, the top performers saw a much smaller move with an average gain of around 2%.
Diving further into that 10th decile of top performers this month, below we show the 38 S&P 500 stocks that managed to buck the trend and rise from Liberation Day until Monday’s close. Especially when compared to the over 20% average decline for the worst performers, these moves were relatively tame, with most being low single-digit gainers. In fact, only one stock rose more than 10%, and that was Newmont Mining (NEM), which has been bolstered by huge gains in the price of gold. Other gainers similarly have defensive tones, although it is not exclusive to those sectors. Notably, defense contractors are frequent fliers on this list in addition. Since Monday’s low, 60% of these stocks have continued to rally with the largest gains being observed by Netflix (NFLX) and Palantir (PLTR).
