Back at the February all-time highs prior to the pandemic bear market, the median dividend yield for S&P 500 stocks was 2.19%. With the S&P 500 back at all-time highs, the median yield is now down to just 1.65%. As shown in the chart below, the trailing 12-month dividend yield spiked to 2.7% at the March 23rd low, but with the market’s rapid rally and some companies cutting their payouts, that yield has ground lower and now stands at just 1.72%. In just this past week, it took out the mid-January low around 1.77% and is now at the lowest levels since November of 2004.

As we have in the past, in the charts below we plot the S&P 500 dividend yield versus the yield on the 10 year Treasury. The past few years have seen some back and forth between which of these assets yield more, but since mid-January, equities have been the clear leader. Even though the dividend yield is at some of its lowest levels in over 15 years and the 10 year Treasury has seen a significant rally this month with its yield now at 0.728%, equities still yield over a full percentage point more than the 10 year Treasury. That difference in yields is well off the peak of 192 bps at the bear market low on March 23rd, but even with that decline, the spread remains well above any period outside the past few months and the Global Financial Crisis. Click here to view Bespoke’s premium membership options for our best research available.

The ten members of the NYSE FANG+ index went on an epic run in the mid to late–2010s that many thought was “bubble” like at the time.  From early 2016 to mid-2018, the FANG+ stocks went up 200%.  After peaking in June 2018, though, the FANG+ index fell nearly 50% before finally finding a floor.  After the big decline in late 2018, many investors moved on from the FANG trade, but now anyone that did is kicking themselves.

The FANG+ stocks went on another big run in 2019 and early 2020 only to collapse 34% during the one-month COVID Crash in late February and early March.  Since making its COVID-Crash low on March 18th, however, the FANG+ index has experienced one of the most remarkable runs that any investor can expect to see in their lifetimes.  As shown in the second chart below, the FANG+ index is up more than 60% over the last six months, and it has more than doubled since its March 18th low.  Those prior highs made back in 2018 are now a distant memory with the index now ~85% above that level.  Click here to view Bespoke’s premium membership options for our best research available.

Below we compare the NYSE FANG+ index since its inception in 2014 to the S&P 500.  The performance disparity continues to get wider and wider with the FANG+ index up 455% and SPY up 74% over the same time frame.

The NYSE FANG+ index is made up of the four FANG stocks (FB, AMZN, NFLX, GOOGL) plus six additional names that have certainly contributed their fair share to the index’s performance.  Stocks like NVIDIA (NVDA), Apple (AAPL), and Tesla (TSLA) stand out the most, with Tesla of course being the most epic winner of them all.  Year-to-date, TSLA is up 435%, and it’s now 50% above its 50-day moving average.  If you’d like to track the FANG+ stocks or any other portfolio of your choosing, you can do so with our Custom Portfolios tool on our website.  Simply start a two-week free trial to Bespoke Premium or Bespoke Institutional to gain access to our Custom Portfolios tool and the rest of our popular Interactive Tools.  You’ll also gain access to a rich library of equity research to keep you on top of the market.

As with many areas of the market, the homebuilder group has skyrocketed higher over the last few months after initially plummeting during the COVID Crash in late February and early March.

Below is a chart of the S&P 1500 Homebuilder group since 1994.  After experiencing a bubble of pretty epic proportions during the real estate boom of the mid-2000s, the homebuilders went on to fall more than 86% during the Financial Crisis.  From the group’s lows in late 2008, it took more than 10 years to finally re-claim its prior highs back in February.  The new all-time highs were made just a few days before COVID hit, and in a cruel turn of events, the group promptly fell 57% in less than a month!

But the homebuilders are now getting the last laugh.  During the COVID Crash, investors sold first and asked questions later.  When they eventually decided to stop panicking, they realized that the new COVID economy would actually be a positive for the homebuilders.  Lockdowns caused people to re-assess their living situations, and a lot of people decided they wanted a change — especially those living in cities that suddenly wanted more space in the suburbs with no commute to worry about.

From the group’s low on March 18th to today, the homebuilder index has surged 150% and re-taken those prior all-time highs once again.

At no time during the housing bubble of the early 2000s did the homebuilder group experience a move like the one seen post-COVID Crash.  As shown below, the group’s 100-day rate of change nearly hit +150% recently, which is more than double the best move seen during any prior 100-day period since 1994.

Below is a snapshot of the individual stocks that make up the homebuilder group run through our Trend Analyzer tool.  While these stocks have experienced some downside mean reversion from very overbought levels over the past week, nearly all of them are still extended well above their 50-day moving averages.  Every single stock in the group is in a long-term uptrend based on our proprietary “trend” algorithm, and 14 of 16 names are up more than 10% YTD.

After hitting an extreme roadblock during the COVID Crash, the homebuilder stocks have been some of the very best performers of the market over the last few months.  Click here to view Bespoke’s premium membership options for our best research available.

If you’ve been paying attention this year, you know that the S&P 500 has been carried by the performance of the index’s largest components, and the chart below illustrates just how wide the disparity has been. It shows the YTD performance of each of the S&P 500’s members sorted by their market cap heading into 2020 with the largest stocks on the left side and the smallest stocks on the right.  So far this year, the 50 largest stocks in the S&P 500 are up an average of 11.3% YTD, and if we were to take an even narrower look at just the ten largest stocks heading into the year, the average YTD gain is over 27%!

While the largest stocks are up a lot this year, the next 400 stocks in terms of market cap haven’t fared nearly as well, averaging a decline of 2.0%.  That’s not great, but considering the pandemic this year, even a 2% decline isn’t such a bad thing.  The same can’t be said for the smallest stocks in the S&P, however.  As shown below, the 50 smallest stocks are down an average of 15.3% YTD, and more than two-thirds of them are down!

Another way to illustrate the declining fortunes of stocks this year based on their size is by looking at a moving average of YTD stock performance across the market cap spectrum,  In the chart below, the first point on the chart represents the performance of the 50 largest stocks in the S&P 500 which have gained an average of 11.3% YTD.  The next point to the right represents the average YTD change of the stocks that ranked between number 2 and 51 in terms of market cap at the start of 2020, and we continue that process down the entire list of components to the point where the last point in the series on the right side of the chart represents the average performance of the 50 smallest stocks in the S&P 500 heading into the year.  As mentioned above, that group of stocks has averaged a decline of 15.3% YTD. The performance of the 50 largest stocks in the S&P 500 ranks as the fourth-best of 451 different points on the chart, while the basket of the 50 smallest stocks ranks as the 29th worst performing basket.  In 2020, the bigger the stock, the better the returns.  Click here to view Bespoke’s premium membership options for our best research available.

Seasonally adjusted jobless claims continue to hover right around 1 million as forecasts were predicting. This week’s reading of 1.006 million was down 98K from 1.104 million last week and remains around some of the lowest levels of the pandemic. But as we have frequently mentioned, that is still very elevated relative to the rest of history.

On a non-seasonally adjusted basis, claims have likewise continued to fall as is the seasonal norm for this time of year. NSA jobless claims came in at a pandemic low of 821.59K this week, down from 889.55K last week.  Again, although NSA claims have been lower, there are seasonal headwinds. Headed into the fall, claims tend to experience a seasonal bottom by mid-September, so NSA claims could begin to tick higher in the coming weeks.

As for seasonally adjusted continuing claims, there was also a small improvement falling from 14.76 million to 14.54 million.  That is a fourth consecutive week in which continuing claims have declined.

Factoring in Pandemic Unemployment Assistance (PUA), total NSA claims actually rose.  Initial PUA claims rose from 0.53 million to 0.61 million for the second straight weekly increase. As for continuing claims (non-seasonally adjusted and lagged an additional week), total claims continued to fall in the first week of August reaching 25.2 million.  That’s around the same levels as late April, but unlike back then, a much larger share of those claims are comprised of PUA claims.

Finally, in the table below we show a breakdown of initial and continuing claims (both NSA) by state.  As depicted, California, Illinois, Iowa, Kansas, and Montana all saw the largest percentage increases in initial claims this week, but not all of those are that elevated relative to where they have been in recent months.  Kansas and  Alaska are reporting claims that are the least improved from their pandemic peak.  Additionally, the bulk of states have reported an improvement this week.  Of the 53 states and territories, 41 reported lower claims this week. While not quite as strong, the same can be said for continuing claims. 39 states reported a decline in continuing claims while 14 reported an increase.  Based on continuing claims, California, DC, Hawaii, Nevada, and  New York currently have the highest unemployment rates each in the teens (continuing claims as a percent of the state’s labor force). Click here to view Bespoke’s premium membership options for our best research available.