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“No one knows what interest rate the market would set, it’s always being manipulated.” – William Dunkelberg, NFIB

Morning stock market summary

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After Friday’s surge didn’t have much in the way of follow-through yesterday, bears have the upper hand this morning as futures are decidedly weaker, and treasury yields are lower (although they’re pretty much exactly where they were at this point yesterday morning).  Investors will also be looking ahead to this afternoon’s meeting between the President and leaders of Congress over the debt ceiling.  Expectations are low, but you never know.  The fact that the President and his advisers are willing to meet after already saying they wouldn’t negotiate, is a small sliver of hope.

The performance of individual stocks grouped by market cap has been interesting to watch this year and for now, has laid to waste the notion that big things come in small packages.  The chart below summarizes the average YTD performance of stocks in various major US indices, and while it may look at first like it’s sorted left to right from best to worst, it’s actually by the market cap of stocks that each index represents from largest to smallest.  On the left, are the Nasdaq 100 and S&P 100 which are comprised of US mega-caps.  The average YTD performance of Nasdaq 100 stocks has been a gain of 11.45% while the 100 components of the S&P 100 are up an average of 4.93% YTD.  Broadening out a little bit to the large-cap S&P 500, the average YTD return of those stocks has been a gain of 2.58%.

Stepping down the market cap ladder from large caps, the average YTD return of mid-cap stocks in the S&P 400 has been a gain of 2.13%.  Finally, at the bottom rungs, we have small and microcap stocks which are the only two of the six indices shown where the average YTD return is negative (-1.89% for stocks in the S&P 600 and -0.28% for stocks in the Russell Microcap index). It’s at these last two indices where the progression of performance getting incrementally weaker also breaks down.

Given its outperformance YTD, it shouldn’t come as a surprise that the Nasdaq 100 is closer to a 52-week high than any of its peers.  The index has essentially been rangebound since a breakout on March 31, but after last Friday’s surge and Monday’s follow-through, it’s making its best effort to break out again. Based on where futures are trading this morning, it doesn’t look like it’s going to happen today, but a lot can change over the course of a few hours, and Wednesday’s CPI will most certainly have a say in how things play out.

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