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“In this building, it’s either kill or be killed. You make no friends in the pits and you take no prisoners.” – Louis Winthorpe III

Morning stock market summary

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

US stocks opened higher yesterday but gave up much of those gains throughout the trading session to close only with modest gains. This morning, futures have taken on a more modest but still positive tone. We’ve had a hefty dose of earnings reports to kick off the trading day, but the main event is Microsoft (MSFT) after the close with Starbucks (SBUX) and Mondelez (MDLZ) playing a supporting role. Before those reports, though, we’ll get JOLTS and Consumer Confidence at 10 AM.

Beyond the US, Asia was mostly lower, although the Nikkei bucked the trend with a modest 0.2% gain after Unemployment came in lower than expected.  The tone in Europe is decidedly more positive with the STOXX 600 up 0.4% as GDP for the region came in stronger than expected even though growth in Germany showed an unexpected decline.

With just two trading days left this month, July has been a month of trading places as stocks and areas previously favored by investors have been taken out to the woodshed while some of the more neglected ones finally get their fifteen minutes – or maybe even more. The two tables below show the performance of the ten largest and ten smallest S&P 500 stocks by market cap on both a month and year-to-date basis.

Starting with the top ten, they are some of the bottom performers for the month. Seven of the ten stocks have declined this month, and the median decline of all ten has been over 5%. Even after these declines, though, nine of the ten stocks are up for the month (only Tesla is lower), and their median YTD is over 20%!

Now moving on to the ten smallest stocks, through Monday’s close, their median MTD performance was a gain of 2.27% with six out of ten stocks rallying.  Contrast that to their YTD performance where all ten stocks are in the red on a YTD basis with a median decline of close to 20%.

The chart below compares the MTD and YTD performance of the 10 largest and smallest stocks in the S&P 500.  On a MTD basis, the performance spread is over 8 percentage points in favor of the ten smallest stocks by market cap. Conversely, on a YTD basis, the performance spread between the two groups of stocks is nearly 42 percentage points. Which areas of the market lead or lag can have a big impact on investor portfolios based on their positioning, but to adapt a phrase from Randolph Duke in Trading Places, no matter which stocks lead or lag the market, Duke & Duke get the commissions.