The average stock in the S&P 500 has gained 4.14% since last Monday’s near-term closing low. Usually, when we see such a strong bounce after a period of weakness, we see the stocks that were down the most during the pullback rally back the most during the bounce. That hasn’t been the case this time around, though.
We broke the S&P 500 into deciles (10 groups of 50 stocks) based on stock performance during the market’s pullback from 4/30-6/3. We then calculated the average performance of the stocks in each decile since 6/3. As shown in the chart below, each decile has seen an average gain between 3.34% and 4.69%. The stocks that held up the best during the pullback are up an average of 3.61% since 6/3, while the stocks that fell the most during the pullback are up an average of 3.89%. We usually see more disparity between these two deciles in this type of market environment. Instead of bidding up the biggest losers during the sell-off, last week’s rally was much more evenly distributed.
One stock characteristic that did have an impact was international revenue exposure. During the market’s sell-off in May on trade fears, S&P 500 stocks that generate the bulk of their revenues outside of the US were crushed. Stocks with all domestic revenues that are much more insulated from tariffs held up much better in May.
We’ve seen outperformance from stocks with heavy international revenue exposure since last Monday. As shown below, the decile of S&P 500 stocks with the most international revenues has posted an average gain of 5.85%, while decile 2 has posted an average gain of 5.68%. On the flip side, stocks with nearly all domestic revenues are only up 2.6% on average since last Monday.
The “internationals” are still down quite a bit from their Q1 highs, so if trade concerns continue to ease, these stocks stand to benefit the most. Bespoke maintains an “International Revenues” database that allows subscribers to find the geographic revenue breakdown for all stocks in the Russell 1,000 and S&P 500. (Click here to access.) It’s a very useful tool if you’re looking for buying or selling opportunities in the current market environment. Start a two-week free trial to Bespoke Premium to unlock our International Revenues tool!