Invesco S&P 500 Equal Weight ETF (ARCA: RSP)

最新ニュース Invesco S&P 500 Equal Weight ETF (ARCA:RSP)

Invesco S&P 500 Equal Weight ETF

Technology

Industrials

Financial Services

Healthcare

Consumer Cyclical

Consumer Defensive

Utilities

Real Estate

Energy

Basic Materials

Communication Services

The Fund generally will invest at least 90% of its total assets in securities that comprise the Underlying Index. The Underlying Index consists of all of the components of the S&P 500 Index (the Parent Index). The Parent Index is designed to measure the performance of equity securities of larger U.S.companies.

Mohawk Industries Inc.

Cco Holdings, Llc/ Cco Holdings Capital

Cbre Group Inc. Class A

Tesla, Inc.

Baker Hughes Co

3M Co.

Citizens Financial Group Inc.

D R Horton Inc

Truist Financial Corp

Stanley Black & Decker Inc.

Tapestry Inc.

Cvs Health Corp.

Gilead Sciences Inc

Exelon Corp

Philip Morris International Inc.

Abbott Laboratories

Globe Life Inc.

General Electric Co.

Uber Technologies Inc

Welltower Inc.

Darden Restaurants Inc.

Dollar Tree, Inc.

Dollar General C

W R Berkley Corp

Ulta Beauty Inc

mosaic co

Universal Health Services Inc.

Hca Healthcare Inc

At&T Inc

Hess Corp

Newmont Corp

Intel Corp

Southwest Airlines Co

Cencora Inc

Invesco Actively Managed Exchange-Traded Fund Trus Invesco S&P 500 Equal Weight Income Advantage ETF

Invesco S&P 500 Equal Weight Communication Services ETF

Invesco S&P 500 Equal Weight Consumer Discretionary ETF

Invesco ESG S&P 500 Equal Weight ETF

Invesco S&P 500 Equal Weight Financial ETF

Invesco S&P 500 Equal Weight Energy ETF

Invesco S&P 500 Equal Weight Health Care ETF

RESPIRERX PHARMA INC by RespireRx Pharmaceuticals Inc.

RespireRx Pharmaceuticals Inc

Invesco S&P 500 Equal Weight Materials ETF

Invesco S&P 500 Equal Weight Industrials Portfolio

Invesco S&P 500 Equal Weight Real Estate ETF

Invesco S&P 500 Equal Weight Consumer Staples ETF

Invesco S&P 500 Equal Weight Technology ETF

Invesco S&P 500 Equal Weight Utilities ETF

Tema ETF, known for its active thematic investment strategies, has unveiled a novel approach to traditional indexing. On Tuesday, in collaboration with S&amp;P Global Inc., the firm introduced the Tema S&amp;P 500 Historical Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DSPY#NYSE">DSPY</a>), a new ETF product designed to tackle <a href="https://www.benzinga.com/markets">unprecedented index concentration risk. </a>
<h3 class="wp-block-heading">S&amp;P 500 Overconcentration Raises Red Flags, Equal Weight ETF Falls Short As Fix</h3>
"Today's S&amp;P 500 concentration is at an all-time high," said Maurits Pot, founder of Tema, in an exclusive interview with Benzinga.
The S&amp;P 500 is increasingly dominated by a handful of tech giants — the so-called Magnificent Seven — which include Microsoft Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NYSE">MSFT</a>), Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), NVIDIA Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>), Alphabet Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOG#NASDAQ">GOOG</a>) (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>), Amazon Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>), Meta Platforms Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/META#NASDAQ">META</a>) and Tesla, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>). 
These seven companies alone make up nearly 30% of the entire index. The top 10 stocks account for 36%, leaving the rest of the 490 companies with diminishing influence.
In comparison, the equal-weight S&amp;P 500 ETF, such as the Invesco Equal Weight S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) gives each stock the same weight — about 0.2% — which effectively erases large-cap dominance but also deviates significantly from the actual index composition.
"If I go equal weight, I actually have very little exposure to the S&amp;P 500," Pot said. "Fundamentally, it&#8217;s a different product."
<h3 class="wp-block-heading">The DSPY Innovation: A Historical Index Weighting</h3>
Tema S&amp;P 500 Historical Weight ETF mirrors the S&amp;P 500 in every way — same companies, same sector exposures, same rebalance frequency — except for one critical difference: how each stock is weighted.
Instead of using the current market cap, the new product assigns each company the average historical weight of its index position (1 through 500) based on 35 years of data since 1989.
For instance, Apple Inc., now the largest stock in the S&amp;P 500 with a nearly 7% weight, is reweighted to about 3.9% — the average weight of the dominant S&amp;P 500 company over the past 35 years.
"What we've built is the S&amp;P 500 with historical weightings," Pot said. "This reduces concentration risk while preserving the index&#8217;s integrity."
Repeat this for all 500 positions, and you get a smoothed-out S&amp;P 500 — one that reflects the index's long-term structure without overexposure to today&#8217;s top tech names.
By using historical weight averages, the ETF maintains the structural DNA of the cap-weighted S&amp;P 500 index while diluting short-term dominance.
Unlike equal-weight ETFs that assign every stock the same arbitrary 0.2% weight, DSPY preserves the natural hierarchy of the S&amp;P 500, offering investors a more reliable and historically grounded representation of the U.S. large-cap market.
<h3 class="wp-block-heading">Comparing DSPY, S&amp;P 500, Equal-Weight ETF</h3>
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Metric</th>
<th>S&amp;P 500</th>
<th>Equal Weight (RSP)</th>
<th>DSPY ETF</th>
</tr>
</thead>
<tbody>
<tr>
<td>Top 3 Stocks Weight (%)</td>
<td>19.84%</td>
<td>0.60%</td>
<td>9.32%</td>
</tr>
<tr>
<td>Top 10 Stocks Weight (%)</td>
<td>36.01%</td>
<td>2.21%</td>
<td>21.28%</td>
</tr>
<tr>
<td>% Index Held by Top 50 Stocks</td>
<td>77.14%</td>
<td>26.22%</td>
<td>71.78%</td>
</tr>
<tr>
<td>Largest Sector Weight</td>
<td>Tech (30.42%)</td>
<td>Industrials (15.65%)</td>
<td>Tech (23.32%)</td>
</tr>
<tr>
<td>Index Coverage Similarity</td>
<td>100%</td>
<td>47%</td>
<td>85%</td>
</tr>
<tr>
<td>Rebalance Frequency</td>
<td>Quarterly</td>
<td>Quarterly</td>
<td>Quarterly</td>
</tr>
<tr>
<td>Apple Inc. Weight (%)</td>
<td>6.78%</td>
<td>0.20%</td>
<td>3.96%</td>
</tr>
<tr>
<td>Microsoft Corp. (%)</td>
<td>6.08%</td>
<td>0.20%</td>
<td>3.06%</td>
</tr>
<tr>
<td>Amazon.com Inc. (%)</td>
<td>5.98%</td>
<td>0.20%</td>
<td>2.30%</td>
</tr>
<tr>
<td>NVIDIA Corp. (%)</td>
<td>3.92%</td>
<td>0.20%</td>
<td>2.11%</td>
</tr>
<tr>
<td>Alphabet Inc. (%)</td>
<td>3.64%</td>
<td>0.20%</td>
<td>1.95%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Data: Tema ETF</figcaption></figure>
Read now: 
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<li><a href="https://www.benzinga.com/government/regulations/25/04/44584000/veteran-investor-warns-of-rising-stagflation-risk-as-tariffs-loom-anticipates-squeezed-profit-margins-for-us-businesses">Veteran Investor Warns Of Rising Stagflation Risk As Tariffs Loom, Anticipates &#8216;Squeezed Profit Margins&#8217; For US Businesses</a></li>
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Tema ETF Trust Tema S&P 500 Historical Weight ETF Strategy

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TSLA

EXCLUSIVE: Tema ETF Tackles Mag 7 Concentration Risk With New S&P 500 Historical Weighting Strategy

Investors who need to balance growth and risk protection now have a new choice in the market. First Trust has listed the FT Vest U.S. Equity Equal Weight Buffer ETF – March (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSMR#NYSE">RSMR</a>). With an expense ratio of 0.85%, this fund provides structured exposure to U.S. equities while hedging against market declines.
In the wake of increased concerns regarding concentration in the S&amp;P 500 index, particularly the Magnificent Seven dominance, investors have sought alternative means to gain exposure and control risk. RSMR <a href="https://www.sec.gov/Archives/edgar/data/1667919/000144554625002241/etf8_497k.htm">presents </a>a highly attractive option with exposure to the price performance of Invesco S&amp;P 500 Equal Weight ETF Trust&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) accompanied by a defensive buffer against losses.
Upside Potential With Downside Protection
One of the most appealing aspects of RSMR is that it can replicate the price return of RSP to a <a href="https://www.ftportfolios.com/Retail/Etf/EtfSummary.aspx?Ticker=RSMR&amp;Print=Y">limit </a>of 13.86%. While doing so, it also offers a cushion against losses—protecting the initial 10% of RSP&#8217;s declines from the beginning of its outcome period.
Yet, note that in the event of a decline in RSP&#8217;s price by more than 10%, the fund will lose at the same percentage as RSP after that point. Also, once fees and other expenses are deducted, the true cap stands at approximately 13.01%, and the coverage drops to 9.15%.
Also Read: <a href="https://www.benzinga.com/general/biotech/25/03/44493674/eli-lilly-palo-alto-networks-traders-take-note-direxions-new-leveraged-etfs-are-here">Eli Lilly, Palo Alto Networks Traders Take Note: Direxion&#8217;s New Leveraged ETFs Are Here</a>
A Different Strategy Using FLEX Options
RSMR mainly invests in FLEX Options, which are structured contracts enabling investors to wager on the performance of the RSP. The options mimic RSP&#8217;s performance over a year, allowing investors to tailor crucial features such as pricing and timing.
With more than 160 ETFs traded in the United States, First Trust is a seasoned participant in the ETF market. The introduction of RSMR further illustrates the company&#8217;s dedication to delivering innovative investment products that respond to investors&#8217; changing needs.
Read Next: 
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<li><a href="https://www.benzinga.com/etfs/new-etfs/25/03/44518378/crypto-with-controlled-risk-how-fortunas-new-bitcoin-fund-aims-to-manage-volatility-maximize-return">Crypto With Controlled Risk: How Fortuna&#8217;s New Bitcoin Fund Seeks To Manage Volatility, Enhance Returns</a></li>
</ul>
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RSMR

New RSMR ETF Balances Risk And Reward For Investors

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Live On CNBC, Bill Baruch Announces Sold Invesco S&P 500 Equal Weight ETF; Bought Invesco QQQ Trust, Series 1

The Magnificent Seven stocks suffered their sharpest drop since last autumn after news broke that DeepSeek, an open-source AI model from China, had entered the fray, raising concerns over pricing power and competition in the sector. Yet, despite the tech sell-off, Goldman Sachs sees no reason to panic, indicating this is a temporary setback rather than the start of <a href="https://www.benzinga.com/topic/expert-ideas">a deeper bear market.</a>
In a note shared Wednesday, Goldman Sachs analyst Peter Oppenheimer indicated that bear markets typically emerge when profit expectations decline due to growing recession fears —conditions that are not currently in place thanks to solid economic fundamentals.
The U.S. economy remains on solid footing, with the bank assigning just a marginal probability of a recession in the next year.
&#8220;In our view this is a correction and not the start of a sustained bear market,&#8221; he said.
<h3 class="wp-block-heading">Market Context: High Valuations, No Recession, Rate Cuts Expected</h3>
Goldman Sachs highlighted that equity markets entered 2025 with high valuations, particularly in the U.S., where price-to-earnings multiples expanded significantly since late 2023.
&#8220;Equity markets came into the year&nbsp;priced for perfection, leaving them vulnerable to disappointments,&#8221; Oppenheimer said. 
Yet, Goldman Sachs remains confident in the broader economic outlook. The bank assigns just a 15% probability of a U.S. recession in the next 12 months and expects inflation to continue easing.
Modest interest rate cuts this year should further support stocks, while a cheaper AI entrant could even help lower costs in the tech sector.
<h3 class="wp-block-heading">High Market Concentration: A Risk Or An Opportunity?</h3>
Oppenheimer highlighted that the U.S. stock market has become increasingly concentrated, with the dominance of the technology sector and a few mega-cap stocks amplifying market swings.
Yet, the concentration risk is not a result of speculative excess but rather strong fundamentals driving earnings growth. While Goldman Sachs expects technology earnings to remain robust, their growth rate may moderate as competition intensifies.
&#8220;The revelation of a cheaper competitor entering the AI space has exposed the risk of concentration,&#8221; the report said. 
A key question for investors is whether AI-driven growth will continue benefiting the same dominant players or shift toward a broader set of companies involved in infrastructure and electrification. 
Historical examples, such as the telecom boom of the late 1990s and the rivalry between Advanced Micro Devices Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMD#NASDAQ">AMD</a>), Intel Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/INTC#NASDAQ">INTC</a>), and Nvidia Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>), suggested that even the most dominant firms eventually face competitive pressures.
<h3 class="wp-block-heading">What Next: Stay Invested, But Diversify</h3>
So, what should investors do now? According to Goldman Sachs, staying invested is key, but diversification is more important than ever. 
The bank recommends spreading exposure beyond the biggest tech names while maintaining hedges to protect against downside risks.
One way to do that is by focusing on the equally weighted S&amp;P 500, tracked by the Invesco Equal-Weight S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>), or mid-cap stocks via the SPDR S&amp;P MidCap 400 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MDY#NYSE">MDY</a>). 
Another is to look at non-tech "compounders," companies with strong earnings potential but lower valuations.
Investors should also consider broadening their geographic exposure. Non-U.S. markets have quietly started to outperform in 2024, offering new opportunities beyond the tech-heavy U.S. landscape. 
Funds like the iShares MSCI ACWI ex U.S. ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ACWX#NASDAQ">ACWX</a>) provide access to a broader range of global equities without exposure to the U.S. market.
Read now: 
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</ul>
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DeepSeek Selloff Is A Correction, Not Start Of 'Sustained Bear Market': Goldman Sachs

<figure class="wp-block-image size-large"><img decoding="async" src="https://thearorareport.com/wp-content/uploads/2025/01/2025-01-28_08h07_13.png" alt="" /></figure>
To gain an edge, this is what you need to know today.
<h4 class="wp-block-heading">Largest Market Cap Loss Ever</h4>
Please <a href="https://thearorareport.com/chart-analysis-stock-market-nvidia-largest-loss-deepseek-nvda-mc-01282025">click here</a> for an enlarged chart of NVIDIA Corp (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>).
Note the following:
<ul>
<li>The chart shows the drop in NVDA stock stopped before it reached the mini support zone.</li>
<li>Volume shown on the chart is very heavy, indicating conviction in the pullback.</li>
<li>RSI on the chart shows that NVDA is not oversold, indicating there is more room to the downside.</li>
<li>Yesterday, NVDA lost $589B in market cap.  This is the largest one day loss ever for any company.</li>
<li>Yesterday illustrates the importance of diversification and proper portfolio construction.  At this time, many retail investors are almost exclusively in AI stocks – such investors suffered massive losses yesterday.  The Arora Report Model Portfolios are illustrations of how to properly construct portfolios using over 50 different strategies.  </li>
<li>Wall Street is coming to Nvidia's defense. In The Arora Report analysis, further clarity is needed.  Nvidia issued a statement on DeepSeek, but the statement does not provide any clarity probably because Nvidia is in a quiet period prior to earnings.</li>
<li>Americans are willy-nilly installing DeepSeek without realizing it is opening their entire device to China.  DeepSeek is the most popular app in the Apple App Store.</li>
<li>Before the stock market opened yesterday, The Arora Report shared with you that Wall Street woke up after about a month after the prior version of DeepSeek was made available at Christmas time.  We also shared with you our skepticism about the cost of $6M for DeepSeek.</li>
<li>Upon further analysis, The Arora Report now has high conviction that the stated cost of DeepSeek is highly misleading.  This is important because it is the stated low cost figure that panicked Wall Street. </li>
<li>For the first time in 20 years, three remarkable things happened yesterday when S&amp;P 500 declined 1.5%:
<ul>
<li>The number of rising stocks far surpassed the number of declining stocks, 350 vs. 152.</li>
<li>Value stocks surged.</li>
<li>Invesco S&amp;P 500 Eql Wght ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) was little changed.</li>
</ul>
</li>
<li>In The Arora Report analysis, instead of going into cash, investors exited AI stocks and bought value stocks.</li>
<li>Chips stocks are rising on a suggestion that Trump will place tariffs on imported chips.</li>
<li>There is also a report of Trump potentially imposing a universal tariff of at least 2.5%.</li>
<li>Those in the momo crowd who exclusively buy out of money call options on popular stocks have seen their accounts completely wiped out.  In our decades in the markets, we have seen this again and again – many in the momo crowd make a lot of money by recklessly buying options and then go on to lose their entire accounts.</li>
<li>Those in the momo crowd who still have money are aggressively buying NVDA, Advanced Micro Devices Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMD#NASDAQ">AMD</a>), Cameco Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CCJ#NYSE">CCJ</a>), Oklo Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/OKLO#NYSE">OKLO</a>), Nano Nuclear Energy Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NNE#NASDAQ">NNE</a>), SoFi Technologies Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SOFI#NASDAQ">SOFI</a>), Palantir Technologies Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PLTR#NASDAQ">PLTR</a>), Rigetti Computing Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/RGTI#NASDAQ">RGTI</a>), Quantum Computing Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QUBT#NASDAQ">QUBT</a>), and WiMi Hologram Cloud Inc &#8211; ADR (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/WIMI#NASDAQ">WIMI</a>).  WIMI announced it will use DeepSeek, catching the attention of the momo crowd.</li>
<li>In The Arora Report analysis, it is important to understand that irrespective of how cheap it may be, corporate America is not going to make a Chinese model like DeepSeek the backbone of their AI efforts.  </li>
<li>Looking forward, we will be careful listening to earnings calls from Amazon.com, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>), Microsoft Corp (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>), Alphabet Inc Class C (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOG#NASDAQ">GOOG</a>), Meta Platforms Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/META#NASDAQ">META</a>), and Tesla Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>) to see if they are making changes to their capital expenditure plans after DeepSeek.</li>
<li>Durable goods came weaker than expected.
<ul>
<li>Durable goods came at -2.2% vs. 0.4% consensus.</li>
<li>Durable goods ex-transportation came at 0.3% vs. 0.5% consensus.</li>
</ul>
</li>
<li>Consumer confidence will be released at 10am ET and may be market moving.</li>
<li>The FOMC meeting starts today.  The rate decision will be announced tomorrow at 2pm ET, followed by Powell's press conference at 2:30pm ET.</li>
</ul>
<h4 class="wp-block-heading">Magnificent Seven Money Flows</h4>
In the early trade, money flows are positive in Alphabet (GOOG), Meta (META), and Nvidia (NVDA).
In the early trade, money flows are neutral in Apple Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), Microsoft (MSFT), and Tesla (TSLA).
In the early trade, money flows are negative in Amazon (AMZN).
In the early trade, money flows are neutral in SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) and Invesco QQQ Trust Series 1 (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>).
<h4 class="wp-block-heading">Momo Crowd And Smart Money In Stocks</h4>
Investors can gain an edge by knowing money flows in SPY and QQQ.&nbsp; Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil.&nbsp; The most popular ETF for gold is SPDR Gold Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GLD#NYSE">GLD</a>).&nbsp; The most popular ETF for silver is iShares Silver Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SLV#NYSE">SLV</a>).&nbsp; The most popular ETF for oil is United States Oil ETF (ASCA:USO).
<h4 class="wp-block-heading">Bitcoin</h4>
Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) was first sold yesterday along with tech stocks.  The dip under $100K was bought.  As of this writing, bitcoin has stabilized over $100K.
<h4 class="wp-block-heading">Protection Band And What To Do Now</h4>
It is important for investors to look ahead and not in the rearview mirror.&nbsp; The proprietary protection band from The Arora Report is very popular.&nbsp; The protection band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.
You can determine your protection bands by adding cash to hedges.&nbsp; The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.&nbsp; If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.
A protection band of 0% would be very bullish and would indicate full investment with 0% in cash.&nbsp; A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.&nbsp; When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.&nbsp; High beta stocks are the ones that move more than the market.
<h4 class="wp-block-heading">Traditional 60/40 Portfolio</h4>
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less.  Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever <a href="https://thearorareport.com/generate-wealth-newsletter-benzinga">Generate Wealth Newsletter</a>.

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Wall Street Comes To Nvidia's Defense After Biggest Loss Ever, Many Momos Wiped Out

Financial market participants who prefer to invest in exchange-traded funds for their diversification benefits could be &#8220;in for a rude awakening,&#8221; says this venture capitalist, as the top ten stocks in the <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/12/42678368/sp-500-hits-57-all-time-highs-in-record-breaking-2024-magnificent-7-drive-30-of-nasdaqs-surge">S&amp;P 500</a> represent 40% of the index market capitalization.
What Happened: Chamath Palihapitiya, the billionaire investor, and former Facebook executive, explains that greater concentration in a few stocks increases the risks of investing.
He highlighted the inequality in the weight of the stocks within the S&amp;P 500 index in an X post on Sunday and said, &#8220;If there is any market volatility, the lack of diversification could cause massive impairment.&#8221;
Kevin Gordon, the director and senior investment strategist at Charles Schwab shared a graphic showing the same.
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"> 
<div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">Equal weight ETF's are always available.
&mdash; Spencer Hakimian (@SpencerHakimian) <a href="https://twitter.com/SpencerHakimian/status/1873144584831910181?ref_src=twsrc%5Etfw">December 28, 2024</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></div>
</figure>
However, this holds true for ETFs mirroring S&amp;P 500&#8217;s weights. Spencer Hakimian, the founder of Tolou Capital Management, replied, to Palihapitiya&#8217;s post and said that &#8220;Equal weight ETF's are always available.&#8221; However, such ETfs also come with their rebalancing and tax costs,
See Also: <a href="https://www.benzinga.com/24/12/42700635/palantir-technologies-nearly-three-times-more-expensive-than-industry-average-shares-zoom-over-395-amid-overbought-conditions">Palantir Nearly 3X More Expensive Than Industry Average: PLTR Stock Zooms Over 395% Amid Overbought Conditions</a> 
Why It Matters: The following are the top ten stocks by index weight within the S&amp;P 500 index. These stocks include the &#8216;Magnificent Seven&#8217; stocks with various classes of their shares, along with Broadcom Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AVGO#NASDAQ">AVGO</a>) and Berkshire Hathaway (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BRK#NYSE">BRK</a>). The information technology sector has the highest weightage among the top 10 S&amp;P 500 constituents. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Constituent</td>
<td>Symbol</td>
<td>Sector</td>
</tr>
<tr>
<td>Apple Inc</td>
<td>(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>)</td>
<td>Information Technology</td>
</tr>
<tr>
<td>Nvidia Corp</td>
<td>(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>)</td>
<td>Information Technology</td>
</tr>
<tr>
<td>Microsoft Corp</td>
<td>(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>)</td>
<td>Information Technology</td>
</tr>
<tr>
<td>Amazon.com Inc</td>
<td>(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>)</td>
<td>Consumer Discretionary</td>
</tr>
<tr>
<td>Meta Platforms Inc</td>
<td>(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/META#NASDAQ">META</a>)</td>
<td>Communication Services</td>
</tr>
<tr>
<td>Alphabet Inc A</td>
<td>(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>)</td>
<td>Communication Services</td>
</tr>
<tr>
<td>Tesla Inc</td>
<td>(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>)</td>
<td>Consumer Discretionary</td>
</tr>
<tr>
<td>Berkshire Hathaway</td>
<td>(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BRK#NYSE">BRK</a>)</td>
<td>Financials</td>
</tr>
<tr>
<td>Alphabet Inc C</td>
<td>(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOG#NASDAQ">GOOG</a>)</td>
<td>Communication Services</td>
</tr>
<tr>
<td>Broadcom Inc</td>
<td>(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AVGO#NASDAQ">AVGO</a>)</td>
<td>Information Technology</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Source: <a href="https://www.spglobal.com/spdji/en/indices/equity/sp-500/#data">S&amp;PGlobal Website</a></figcaption></figure>
For a market capitalization-weighted index, the weights are typically proportional to a company&#8217;s market cap, giving larger companies greater influence. However, an equal-weighted Index assigns the same weight to each constituent stock, regardless of its market size.
The S&amp;P 500 Index has outperformed the S&amp;P 500 Equal Weight Index this year and the same is the case with the ETFs tracking these indices. The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) was up 25.89% this year, while the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) gained only 11.94% in 2024. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Index/ETF</td>
<td>Six Months</td>
<td>YTD</td>
</tr>
<tr>
<td>S&amp;P 500 Index</td>
<td>9.05%</td>
<td>25.89%</td>
</tr>
<tr>
<td>SPDR S&amp;P 500 ETF Trust</td>
<td>9.11%</td>
<td>25.89%</td>
</tr>
<tr>
<td>S&amp;P 500 Equal Weight Index</td>
<td>8.33%</td>
<td>11.88%</td>
</tr>
<tr>
<td>Invesco S&amp;P 500 Equal Weight ETF</td>
<td>8.43%</td>
<td>11.94%</td>
</tr>
</tbody>
</table>
</figure>
Photo by TechCrunch on Flickr
Read Next:
<ul>
<li><a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/12/42678014/top-7-blue-chip-stocks-with-the-best-return-potential-going-into-2025">Top 7 Blue-Chip Stocks With The Best Return Potential Going Into 2025 </a></li>
</ul>

Markets

AVGO

Chamath Palihapitiya Says S&P 500 index ETFs Need To Be 'Fixed' Or They Will End In 'Disaster' — Here Is What The Billionaire Investor Said

The performance gap between the cap-weighted S&amp;P 500 — tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) — and its equal-weighted sibling, the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>), has blown out to over 4 <a href="https://www.benzinga.com/markets">percentage points in December. </a>
This marks the widest monthly gap since May 2023, reflecting how a narrow group of stocks is shouldering the market's returns in the last month of the year. 
As of Dec. 17, only 90 out of 500 stocks in the S&amp;P 500 are in positive territory month-to-date, a shockingly narrow market breadth.
Excluding Nvidia Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>), all of the Magnificent Seven stocks — Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), Microsoft Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>), Alphabet (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>), Amazon.com Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>), Meta Platforms Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/META#NASDAQ">META</a>), and Tesla Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>) — have posted gains this month.
If Broadcom Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AVGO#NASDAQ">AVGO</a>), which recently surpassed the $1 trillion market-cap threshold, is added to the mix, an equal-weighted portfolio of these eight stocks has already delivered a stunning 16% return so far in December.
That stands in stark contrast to the broader market's struggles as the equal-weighted S&amp;P 500 index fell by 3% month to date. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Name</th>
<th>Price Chg. % (MTD)</th>
<th>Market Cap ($)</th>
</tr>
</thead>
<tbody>
<tr>
<td>Broadcom Inc.</td>
<td>48.27</td>
<td>1.12 trillion</td>
</tr>
<tr>
<td>Tesla, Inc.</td>
<td>37.03</td>
<td>1.52 trillion</td>
</tr>
<tr>
<td>Alphabet Inc.</td>
<td>16.72</td>
<td>2.43 trillion</td>
</tr>
<tr>
<td>Amazon.com, Inc.</td>
<td>11.18</td>
<td>2.43 trillion</td>
</tr>
<tr>
<td>Meta Platforms, Inc.</td>
<td>9.15</td>
<td>1.58 trillion</td>
</tr>
<tr>
<td>Microsoft Corporation</td>
<td>7.25</td>
<td>3.38 trillion</td>
</tr>
<tr>
<td>Apple Inc.</td>
<td>6.52</td>
<td>3.82 trillion</td>
</tr>
<tr>
<td>NVIDIA Corporation</td>
<td>-5.94</td>
<td>3.18 trillion</td>
</tr>
</tbody>
<tfoot>
<tr>
<td>Average</td>
<td>16.26%</td>
<td></td>
</tr>
</tfoot>
</table>
</figure>
<h3 class="wp-block-heading">Weak Breadth: Bad Sign Or Hidden Opportunity?</h3>
Ryan Detrick, CMT, chief market strategist at Carson Group LLC, highlighted a notable trend. 
The S&amp;P 500 has now posted 11 consecutive days of more decliners than advancers, tying the longest streak since 1996. 
While many investors might view this as a bearish signal, historical data paints a surprisingly different picture.
"Many claim this is bearish, but is it?" Detrick stated. "Looking at the longest streaks ever actually appears to be rather bullish. Significant outperformance across the board out one year."
Here's how the S&amp;P 500 performed historically following similar stretches of negative breadth:
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Date</th>
<th>Days of Negative Breadth</th>
<th>1-Month</th>
<th>3-Months</th>
<th>6-Months</th>
<th>1-Year</th>
</tr>
</thead>
<tbody>
<tr>
<td>9/10/1991</td>
<td>8</td>
<td>-2.1%</td>
<td>-1.4%</td>
<td>6.0%</td>
<td>7.9%</td>
</tr>
<tr>
<td>6/20/1996</td>
<td>11</td>
<td>-4.3%</td>
<td>3.2%</td>
<td>10.5%</td>
<td>35.6%</td>
</tr>
<tr>
<td>12/24/2018</td>
<td>8</td>
<td>13.3%</td>
<td>19.3%</td>
<td>23.9%</td>
<td>37.1%</td>
</tr>
<tr>
<td>Average</td>
<td>—</td>
<td>3.0%</td>
<td>4.8%</td>
<td>8.6%</td>
<td>14.8%</td>
</tr>
<tr>
<td>All Years Avg</td>
<td>(1950–2023)</td>
<td>0.7%</td>
<td>2.2%</td>
<td>4.4%</td>
<td>9.0%</td>
</tr>
</tbody>
</table>
</figure>
Notably, the historical data shows that returns tend to improve significantly over the next year, with 87.5% of cases showing positive performance after a prolonged stretch of weak breadth.
In essence, bad breadth doesn't necessarily spell bad news. If history holds, weak market participation could signal stronger returns ahead.
Yet investors may have to deal with an increase in volatility and potential for sharp pullbacks.
Adam Turnquist, chief technical strategist at LPL Financial, took a more pessimistic view on the S&amp;P 500's 11-day streak of decliners outpacing gainers.
&#8220;The last time this occurred was on June 20, 1996 — only days before a sharp 10% drawdown over the following month that ended almost directly on support from the rising 200-dma. While this does not imply a market top or even correction is imminent, it does add to the evidence of potentially weak footing underneath this latest advance,&#8221; he stated. 
<h3 class="wp-block-heading">Growth Sectors Shine, But Broader Rebounds Possible</h3>
The performance story has become sharply sector-specific. 
Stephen Suttmeier, CFA, CMT, analyst at Bank of America, indicated that December's gains have been heavily concentrated in growth sectors, such as Discretionary, Communications Services and Technology.
"All other sectors showed a negative performance," Suttmeier said, highlighting the underperformance of the equal-weighted S&amp;P 500 ETF (RSP). Yet, he remains cautiously optimistic, suggesting of potential &#8220;rebounds into year-end for both the NYSE Composite Index (NYA) and RSP."
Read Next: 
<ul>
<li><a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/12/42531373/financial-stocks-near-record-year-could-trump-deregulation-fuel-bigger-gains-in-2025">Financial Stocks Near Record Year: Could Trump Deregulation Fuel Bigger Gains In 2025?</a></li>
</ul>
Photo via Shutterstock.

Market Breadth Worsens As Tech Giants Break Free From S&P 500 Reality: Is This Bullish Or Bearish For 2025?

President-elect Donald Trump&#8216;s victory has fueled a rally in equities. This is likely to sustain as the <a href="https://www.benzinga.com/24/11/42158682/donald-trumps-win-positive-for-financials-energy-sector-as-pro-growth-effects-will-outweigh-inflationary-pressures-says-analyst">administration plans</a> on &#8220;tax cuts and deregulation will lead to higher corporate earnings,&#8221; said Yogesh Kansal, chief business officer at fintech company, Appreciate. He added that highly regulated sectors like oil and gas will benefit under Trump&#8217;s administration.
What Happened: While tax cuts and deregulation are positive for the stock markets, the Trump administration&#8217;s take on immigration and <a href="https://www.benzinga.com/24/11/42178994/trump-says-he-will-impose-25-tariffs-on-canada-mexico-on-first-day-of-office-and-extra-tariffs-on-china-until-they-pay-attention">higher tariffs</a> have an opposing effect on the markets.
As per Kansal, with the deportation of immigrants, &#8220;the cost of labor will go up for all companies, which basically means the profitability of companies will go down.&#8221; Additionally, he said that with tariffs, the &#8220;stock prices could be lower&#8221; because of a shift in &#8220;global demand&#8221;.
Morgan Stanley, in its note dated Dec. 3, also cautions that concerns over trade tariffs, immigration policies, fiscal sustainability, and how the scope and timing of new policies may constrain the broader economic outlook. The global financial services firm anticipates growth and innovation, particularly in the technology and natural gas sectors.
See Also: <a href="https://www.benzinga.com/24/11/42158682/donald-trumps-win-positive-for-financials-energy-sector-as-pro-growth-effects-will-outweigh-inflationary-pressures-says-analyst">Donald Trump&#8217;s Win Positive For Financials, Energy Sector As &#8216;Pro-Growth Effects Will Outweigh Inflationary Pressures,&#8217; Says Analyst</a>
Why It Matters: According to Kansal, highly regulated industries like &#8220;energy, oil and gas, health care, and banking will be seeing tailwinds&#8221; because of the deregulation attempts.
Invesco S&amp;P 500 Equal Weight ETF (ACRA: RSP) has risen by 17.3% on a year-to-date basis. While, the iShares Russell 1000 Value ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWD#NYSE">IWD</a>) and Vanguard High Dividend Yield Index ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VYM#NYSE">VYM</a>) advanced by 18.56% and 18.96%, respectively, in the same period, underperforming the S&amp;P 500 on a year-to-date basis, which has grown by 28.41% in the same period.
On the other hand, ProShares S&amp;P 500 Ex-Energy ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPXE#NYSE">SPXE</a>) grew by 28.85% year-to-date, outperforming the index.
Other analysts have also said that Trump&#8217;s victory will lead to a boom in the energy sector. <a href="https://www.benzinga.com/24/11/42158682/donald-trumps-win-positive-for-financials-energy-sector-as-pro-growth-effects-will-outweigh-inflationary-pressures-says-analyst">According to</a> Mario Georgiou, CFA and executive director, head of investments at InCred Global Wealth U.K., "deregulation supporting oil production and geopolitical risks could sustain elevated oil prices and relative valuations are attractive."
Even though the energy sector has underperformed the broader markets in 2024, "fundamentally, companies are shareholder friendly with 8-12% shareholder yields, have strong balance sheets with low net debt to EBITDA ratios and high free cash flow yields of 6.50% and above," he adds.
As per Morgan Stanley, the energy sector faces a divided future. Trump&#8217;s deregulation could benefit traditional energy, but the outlook for oil is uncertain due to potential oversupply and weak global demand, especially from China. In contrast, natural gas may see growth from strong European demand and increased domestic use for electrification and AI-powered data centers. The clean energy sector could face challenges, if Trump rollbacks Biden&#8217;s 2022 Inflation Reduction Act tax credits. However, a full repeal seems unlikely due to the benefits for Republican states.
Kansal, on the other hand, was also positive about the technology sector given the rise in the A-I frenzy. &#8220;The biggest factor that is driving the U.S. stock market right now is AI. There&#8217;s a lot of activity, lots of investment that has gone in because of the expectation of AI increasing productivity,&#8221; he said.
However, Georgiou said, &#8220;Rising bond yields increase the discount rate applied to future earnings, disproportionately affecting high-growth sectors like technology. We therefore prefer higher quality tech companies, avoiding highly leveraged, unprofitable tech stocks. This does not make us underweight Technology, as there are sufficient high-quality companies in this sector to make up the allocation with.&#8221;
Major AI payers in the U.S. stock markets include Nvidia Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>) with a 195.7% year-to-date gain and Microsoft Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>) with stock gains of 19.6% in the same period.
Amazon.com Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>) and Alphabet Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOG#NASDAQ">GOOG</a>) (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>) rose by 51.42% and 26.46% year-to-date, respectively. &#8220;So I think in the next 12 months, software as well as hardware, technology industries will do well including FAANG stocks and Nvidia,&#8221; Kansal added.
Read Next:
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<li><a href="https://www.benzinga.com/24/11/42134031/markets-got-it-wrong-after-elections-prospects-of-tariffs-not-good-for-equities-vs-dollar-says-ex-goldman-sachs-analyst" target="_blank" rel="noreferrer noopener">Markets Misread Trump Win, Says Ex-Goldman Sachs Analyst: ‘Prospects Of Tariffs Not Good For Equities'</a></li>
</ul>
Photo courtesy: Shutterstock

SPXE

Trump's Deregulation Efforts To Benefit Energy, Oil And Gas Sectors, While AI Frenzy Will Boost FAANG Stocks And Nvidia, Says Fintech Insider

The Republican party&#8217;s win in the 2024 elections could pave the way for significant policy changes, according to Morgan Stanley. The global financial services firm anticipates growth and innovation, particularly in the <a href="https://www.benzinga.com/24/11/42158682/donald-trumps-win-positive-for-financials-energy-sector-as-pro-growth-effects-will-outweigh-inflationary-pressures-says-analyst">technology </a>and <a href="https://www.benzinga.com/money/best-natural-gas-stocks">natural gas</a> sectors. However, it also cautions that concerns over trade tariffs, immigration policies, fiscal sustainability, and the scope and timing of new policies may constrain the broader economic outlook.
Morgan Stanley&#8217;s Picks
Markets have reacted positively to President-elect Donald Trump&#8216;s victory and have been trading higher than the pre-election levels. However, slower-than-expected deregulation and shallower tax cuts could impact the markets, Morgan Stanley's Global Investment Office believes investors should keep an eye on the following areas:
Energy As per Morgan Stanley, the energy sector faces a divided future. Trump&#8217;s deregulation could benefit traditional energy, but oil&#8217;s outlook is uncertain due to potential oversupply and weak global demand, especially from China. In contrast, natural gas may see growth from strong European demand and increased domestic use for electrification and AI-powered data centers. The clean energy sector could face challenges, if Trump rollbacks Biden&#8217;s 2022 Inflation Reduction Act tax credits. But a full repeal seems unlikely due to the benefits for Republican states.
Invesco S&amp;P 500 Equal Weight ETF (ACRA: RSP) has risen by 17.36% on a year-to-date basis. While, the iShares Russell 1000 Value ETF (ACRA: IWD) and Vanguard High Dividend Yield Index ETF (ACRA: VYM) advanced by 18.56% and 18.96%, respectively, in the same period, underperforming the S&amp;P 500 on a year-to-date basis, which has grown by 28.41% in the same period. Whereas, ProShares S&amp;P 500 Ex-Energy ETF (ACRA: SPXE) grew by 28.85% year-to-date, outperforming the index.
Also read: <a href="https://www.benzinga.com/24/11/42158682/donald-trumps-win-positive-for-financials-energy-sector-as-pro-growth-effects-will-outweigh-inflationary-pressures-says-analyst">Donald Trump&#8217;s Win Positive For Financials, Energy Sector As &#8216;Pro-Growth Effects Will Outweigh Inflationary Pressures,&#8217; Says Analyst</a>
Defense U.S. <a href="https://www.benzinga.com/trading-ideas/movers/24/12/42369000/booz-allen-and-palantir-partner-to-drive-us-defense-operations">defense</a> spending is expected to stay robust amid rising geopolitical tensions, says Morgan Stanley. However, European defense stocks have outperformed U.S. ones due to uncertainty about U.S. NATO involvement and increased spending by other NATO members.
Trump during his first post-election network interview with NBC News on Sunday said &#8220;If they&#8217;re paying their bills, and if I think they&#8217;re treating us fairly, absolutely, I would stay with NATO.&#8221;
Moreover, technological advancements in cybersecurity, AI, drones, and other areas are also favoring smaller, specialized companies over traditional defense giants, added Morgan Stanley.
As per the <a href="https://pro.benzinga.com/dashboard">Benzinga Pro</a> data, the S&amp;P 500 Aerospace &amp; Defense Industry Index has risen by 15.78% year-to-date, whereas Lockheed Martin Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LMT#NYSE">LMT</a>), RTX Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RTX#NYSE">RTX</a>) and iShares U.S. Aerospace &amp; Defense ETF (ACRA: ITA) have grown by 12.48%, 38.45% and 20.15%, respectively in the same period.
Also read: <a href="https://www.benzinga.com/markets/24/12/42317289/ray-dalios-bridgewater-adds-broadcom-apple-smci-in-q3-while-offloading-stake-in-ai-giant-nvidia-and">Ray Dalio&#8217;s Bridgewater Adds Broadcom, Apple, SMCI In Q3, While Offloading Stake In AI Giant Nvidia And Other Big Tech Companies</a>
Technology And Communication According to Morgan Stanley, the technology sector may see mixed outcomes. Cryptocurrencies and AI industries could benefit from Trump&#8217;s favorable stance. Whereas investments in reshoring semiconductors through the CHIPS Act may strengthen those areas, highlighting AI as a national security priority. However, social media and information companies may continue facing regulatory and antitrust challenges.
Major AI payers in the U.S. stock markets include Nvidia Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>) with a 195.7% year-to-date performance and Microsoft Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>) 19.6% growth in the same period. Whereas, Amazon.com Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>) and Alphabet Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOG#NASDAQ">GOOG</a>) rose by 51.42% and 26.46% year-to-date, respectively.
Photo Courtesy: Shutterstock.com
Read next: <a href="https://www.benzinga.com/24/12/42283257/charles-schwab-goldman-sachs-invesco-add-mara-holdings-morgan-stanley-cuts-stake-here-is-what-changed-with-mara-holdings-in-q3">Charles Schwab, Goldman Sachs Boosts MARA Stake As Stock Rallies 30% In Past 6 Months: Morgan Stanley, Other Major Funds Trim Positions In Q3</a>

iShares Dow Jones US Aerospace & Defense Index Fund

Morgan Stanley Narrows Down Winning And Losing Bets In The First 100 Days Of Trump Administration

Donald Trump&#8217;s <a href="https://www.benzinga.com/general/market-summary/24/11/41968003/gold-drops-to-a-two-month-low-as-investors-turn-to-bitcoin-after-trumps-victory-but-this-economist-remains-confident-that-gold-will-surge">win is positive for the financial and energy sectors</a> as the &#8220;pro-growth effects of fiscal stimulus currently outweigh the inflationary risks in the near term​​​&#8221; according to an analyst. 
What Happened: Mario Georgiou, CFA and executive director, head of investments at InCred Global Wealth U.K., in an exclusive conversation with <a href="http://pro.benzinga.com">Benzinga</a>, described tax cuts and deregulation as tailwinds to the markets. He considers inflationary policies such as tariffs and immigration impacts as headwinds, leading to a steepening yield curve, and higher term premiums.
&#8220;Financials offer an attractive risk-reward and that this recent post-election rally has room to run,&#8221; added Georgiou. According to him &#8220;financials are not only well positioned to capture the benefits of the above-mentioned Trump tailwinds, but are also less impacted / would even benefit from the Trump headwinds.&#8221;
Despite a few dips, the equity markets have been trading higher than the pre-election levels after President-elect Trump&#8217;s victory. The S&amp;P 500 has increased by 3.22%, rising from $5,782.76 on Nov. 5 to $5,969.34 as of Friday&#8217;s close. The SPDR S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) which tracks the S&amp;P 500 Index has had a similar momentum, according to data from <a href="http://pro.benzinga.com">Benzinga Pro</a>.
Meanwhile, Financial Select Sector SPDR Fund (ACRA: XLF), Vanguard Financials ETF (ACRA: VFH), iShares U.S. Financials ETF (ACRA: IYF), and SPDR S&amp;P Bank ETF (ACRA: KBE), have returned over 30% year-to-date in 2024 outperforming the S&amp;P 500 Index&#8217;s 26% run.
Also read: <a href="https://www.benzinga.com/24/11/42131911/donald-trump-appointed-doge-to-have-marginal-impact-saving-50-100-billion-says-analyst-as-elon-musk-aims-to-target-500-billion-plus-in-federal-expenditures">Donald Trump&#8217;s DOGE Initiative To Have &#8216;Marginal Impact&#8217; Says Analyst As Elon Musk Aims To Target Over $500B In Federal Expenditures</a>
Other sectors that Georgiou prefers, include energy. According to him &#8220;deregulation supporting oil production and geopolitical risks could sustain elevated oil prices and relative valuations are attractive.&#8221;
Even though the energy sector has underperformed the broader markets in 2024, &#8220;fundamentally, companies are shareholder friendly with 8-12% shareholder yields, have strong balance sheets with low net debt to EBITDA ratios and high free cash flow yields of 6.50% and above,&#8221; he adds.
Invesco S&amp;P 500 Equal Weight ETF (ACRA: RSP), iShares Russell 1000 Value ETF (ACRA: IWD), Vanguard High Dividend Yield Index ETF (ACRA: VYM) and ProShares S&amp;P 500 Ex-Energy ETF (ACRA: SPXE) have all underperformed the S&amp;P 500 on a year-to-date basis.
Why It Matters: As markets hit their 51st record high of 2024 and the S&amp;P 500 Index crossed 6,000 points, some analysts caution that<a href="https://www.benzinga.com/24/11/42134031/markets-got-it-wrong-after-elections-prospects-of-tariffs-not-good-for-equities-vs-dollar-says-ex-goldman-sachs-analyst"> tariffs could pose risks </a>to equities and suggest that the market may be overvalued.
&#8220;The prospect of tariffs isn't obviously good for equities, while it's clearly good for the Dollar," former Goldman Sachs FX strategist and senior fellow at Brookings Institution, Robin Brooks said in an X post. "Markets initially got this wrong, driving stocks up sharply right after Nov. 5,&#8221; he added.
However, Georgiou is &#8220;cautiously optimistic&#8221; about the markets, he said &#8220;a neutral to fully invested equity allocation is warranted, with a focus on sectors benefiting from Trump's policies, whilst always maintaining our core investment principles, which is a focus on fundamentals, quality, and risk management.&#8221;
<ul>
<li>Read next: <a href="https://www.benzinga.com/24/11/42134031/markets-got-it-wrong-after-elections-prospects-of-tariffs-not-good-for-equities-vs-dollar-says-ex-goldman-sachs-analyst">Markets Misread Trump Win, Says Ex-Goldman Sachs Analyst: &#8216;Prospects Of Tariffs Not Good For Equities&#8217;</a></li>
</ul>
Image via Flickr

General

iShares Dow Jones US Financial Sector Index Fund

Donald Trump's Win Positive For Financials, Energy Sector As 'Pro-Growth Effects Will Outweigh Inflationary Pressures,' Says Analyst

Market Vectors ETF Trust Market Vectors Gold Miners

MSTR

Elliott Investment Management 13F Shows Exited Position In Marathon Petroleum, Previously Holding 7,365,000 Shares; Ishares Biotechnology ETF Put Position, Previously Holding 2,800,000 Shares; Invesco S&P 500 Equal Weight ETF Put Position, Previously Holding 1,925,000 Shares; Vaneck Gold Miners ETF Put Position, Previously Holding 5,000,000 Shares; BHP Group Ltd Call Position, Previously Holding 2,500,000 Shares; MicroStrategy Convertible Note, Previously Holding $27.5 Million In Principal

On CNBC's &#8220;<a href="https://www.cnbc.com/video/2024/11/12/final-trades-invesco-sp-500-equal-weight-salesforce-inc-microsoft-and-target.html">Halftime Report Final Trades</a>,&#8221; Bill Baruch of Blue Line Capital picked Microsoft Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>), expecting it to outperform the Nasdaq between now and the end of the year.
On Oct. 30, Microsoft reported first-quarter revenue of $65.60 billion, up 16% year-over-year. The total beat a Street consensus estimate of $64.51 billion according to data from Benzinga Pro. The company reported first-quarter earnings per share of $3.30, beating a Street consensus estimate of $3.09 per share.
Don't forget to check out our <a href="https://www.benzinga.com/premarket/">premarket coverage here</a>
Bryn Talkington of NewEdge Wealth named Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) <a href="https://www.benzinga.com/quote/RSP">as her final trade</a>.
Rob Sechan of NewEdge Wealth picked Salesforce, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CRM#NYSE">CRM</a>).
Salesforce will release its third quarter fiscal year 2025 results, after the closing bell on Tuesday, Dec. 3. Analysts expect the company to report quarterly earnings at $2.44 per share, up from $1.96 per share in the year-ago period. The company projects to report quarterly revenue of $9.34 billion.
Stephanie Link of Hightower said she expects a solid quarter from Target Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TGT#NYSE">TGT</a>).
On Oct. 22, Bernstein analyst Dean Rosenblum initiated coverage on Target with a Market Perform rating and announced a price target of $168.
Price Action:
<ul>
<li>Invesco S&amp;P 500 Equal Weight ETF fell 0.8% during Tuesday's session.</li>
<li>Salesforce shares fell 0.2% to settle at $341.15 during Tuesday's session.</li>
<li>Microsoft gained 1.6% during Tuesday's session.</li>
<li>Target shares gained 1.6% to close at $155.65 on Tuesday.</li>
</ul>
Check This Out: 
<ul>
<li><a href="https://www.benzinga.com/24/11/41899303/top-3-tech-and-telecom-stocks-which-could-rescue-your-portfolio-in-q4">Top 3 Tech And Telecom Stocks Which Could Rescue Your Portfolio In Q4</a></li>
</ul>
Image: Shutterstock

Long Ideas

Media

Microsoft, Salesforce, Target  And More On CNBC's 'Final Trades'

CNBC Halftime Report Final Trades: Salesforce, Microsoft, Target, Invesco S&P 500 Equal Weight ETF

The idea of a "lost decade" for S&amp;P 500 returns in the next 10 years has gained traction after a bearish report from Goldman Sachs earlier in October, which predicted very subdued annual returns for U.S. stocks over the next decade and possible underperformance <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41431485/goldman-sachs-predicts-bleak-long-term-s-p-500-returns-as-market-concentration-hits">against other asset classes. </a>
This view, however, has sparked strong pushback from other prominent Wall Street voices, including analysts at Bank of America and veteran investor Ed Yardeni.
<h3 class="wp-block-heading">Goldman Sachs&#8217; Grim Outlook: Just 3% Annual Returns Ahead</h3>
Goldman Sachs recently forecasted that the S&amp;P 500, as tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), will deliver an annualized nominal total return of just 3% over the next 10 years, placing this return scenario in the 7th percentile of historical outcomes since 1930. Adjusted for inflation, the real return would hover around 1% per year. 
According to Goldman, the S&amp;P 500 has a 72% probability of underperforming bonds and a 33% chance of lagging inflation through 2034.
David J. Kostin, chief U.S. equity strategist at Goldman Sachs, highlighted that extreme market concentration is a key factor weighing down their long-term outlook. Currently, the U.S. stock market is more concentrated in a few mega-cap tech names than at any point in the last century, which Kostin suggests could limit the broader market&#8217;s returns in the coming years.
<h3 class="wp-block-heading">Bank of America: A Case For Equal-Weighted Stocks And Dividend Reinvestment</h3>
While Bank of America's equity analyst Savita Subramanian acknowledged on Monday that the S&amp;P 500 is "statistically expensive," she indicated potential upside in the equal-weighted version of the index, tracked by the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>).
The equal-weighted S&amp;P 500 currently trades at a &#8220;historic discount&#8221; to the traditional, cap-weighted index and could offer more attractive returns over the next decade, according to Subramanian.
Subramanian suggests that dividends could provide an overlooked source of gains for investors. 
&#8220;We may have forgotten about dividends because they did little for total returns in the past decade,&#8221; she said.
She highlighted that dividends historically contributed 40% of total returns before the period of low-interest rates prior to the pandemic. 
If dividend contributions revert to historical levels, Subramanian projects that the equal-weighted S&amp;P 500 could deliver an 8.3% total return annually, thanks in part to dividend growth from mature tech giants in the "Magnificent 7" that are now initiating dividend programs.
<h3 class="wp-block-heading">Ed Yardeni: Optimism For Earnings Growth And The &#8220;Roaring 2020s&#8221;</h3>
Veteran Wall Street strategist Ed Yardeni openly challenged Goldman's downbeat S&amp;P 500 long-term forecast. 
In a note published on Monday, Yardeni wrote, "We don't agree with [Goldman's recent depressing long-term prediction for S&amp;P 500 returns." 
Yardeni is forecasting annual earnings growth of at least 6% over the next decade, consistent with the S&amp;P 500's long-term historical average of 6.5%.
Yardeni also disputed Goldman's concerns about market concentration. While tech and communication services companies now account for roughly 40% of the S&amp;P 500—similar to their share during the dot-com bubble—he indicated that today's tech giants are financially stronger and more resilient than those in 2000.
While a &#8220;lost decade&#8221; for stocks isn&#8217;t unprecedented—the S&amp;P 500 remained flat for 10 years after peaking in April 2000, amid the dot-com crash and the Great Financial Crisis—the investor highlighted that S&amp;P 500 dividends still rose by 41% during that period.
If the conditions for a &#8220;Roaring 2020s&#8221; scenario take hold—marked by a productivity-driven economic boom fueled by technological advancements, with real GDP growth stabilizing around 3% annually and inflation at 2%—Yardeni forecasts an average annual total return of 11% for the S&amp;P 500 over the next decade.
Read Next:
<ul>
<li><a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41502146/30-year-treasury-yield-tops-4-50-raising-red-flags-for-markets-bond-vigilantes-are-">30-Year Treasury Yield Tops 4.50%, Raising Red Flags For Markets: &#8216;Bond Vigilantes Are Voting Early,&#8217; Says Veteran Investor</a></li>
</ul>
Photo: Shutterstock

Economics

Is S&P 500 Headed For A Lost Decade? Analysts Say 'We May Have Forgotten About Dividends'

Goldman Sachs has issued a stark warning for U.S. equity investors, predicting significantly lower returns for the S&amp;P 500 over the next decade due to historically high <a href="https://www.benzinga.com/topic/magnificent-7">levels of market concentration. </a>
The firm's analysts, including David J. Kostin and Ben Snider, highlight that the current concentration in the U.S. stock market is the highest it has been in the past century, which they believe could weigh heavily on long-term index returns.
Market concentration currently ranks &#8220;near the highest level in 100 years,&#8221; analysts warned, adding that their &#8220;S&amp;P 500 baseline 10-year return forecast is lower than the estimates of other market participants.&#8221;&nbsp;
<h3 class="wp-block-heading">Long-Term Return Forecast: Only 3% Annually Over the Next Decade</h3>
Goldman Sachs forecasts that the S&amp;P 500 will deliver an annualized nominal total return of just 3% over the next 10 years—placing it in the 7th percentile of historical returns since 1930. Adjusting for inflation, the real return is expected to be around 1%. 
This projection stands in stark contrast to the past decade, where the S&amp;P 500 delivered a robust 13% annualized total return, placing it in the 58th historical percentile.
&#8220;The current extremely high level of market concentration is one of the main drags on our return forecast,&#8221; analysts wrote in their report.
If the current high level of market concentration were excluded from the model, the firm&#8217;s baseline forecast would improve by 4 percentage points, yielding a 10-year return estimate of 7%, which would rank in the 22nd historical percentile.
<h3 class="wp-block-heading">The Impact of Market Concentration on Returns</h3>
The extreme market concentration—driven by a handful of mega-cap companies like Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), Microsoft Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NYSE">MSFT</a>), Amazon.com Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>), Nvidia Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>) and Alphabet Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>)—means that the performance of the S&amp;P 500 is increasingly dependent on the fortunes of a small number of firms. 
&#8220;When equity market concentration is high, the performance of the aggregate index is strongly dictated by the prospects of a few stocks,&#8221; Goldman Sachs explained.
Historically, it has been challenging for any firm to sustain high levels of sales growth and profitability over long periods. As growth decelerates for these market leaders, overall earnings growth for the index tends to slow down, pulling down returns.
Another major risk is government regulation, which has previously caused growth slowdowns for dominant firms.
Goldman Sachs highlighted historical examples where regulation led to a decline in market dominance:
<ul>
<li>International Business Machine Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IBM#NYSE">IBM</a>): In 1969, IBM faced a government lawsuit that weighed on its valuations. Though the lawsuit was dropped in 1982, the company's growth slowed afterward.</li>
<li>AT&amp;T (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/T#NYSE">T</a>): The telecom giant faced a breakup order in 1982 following a lawsuit filed in 1974, which led to slower growth. However, AT&amp;T's valuations initially rose after the breakup.</li>
<li>Microsoft: In 1998, Microsoft faced antitrust lawsuits that led to a settlement in 2000. The tech giant's growth and valuations suffered for a significant portion of the following decade.</li>
</ul>
<h3 class="wp-block-heading">Equal-Weighted S&amp;P 500 Index May Outperform, Bonds To Pose A Growing Appeal</h3>
Given the risks of high market concentration, Goldman Sachs anticipates that the S&amp;P 500 equal-weighted index, which gives each stock the same weight regardless of size and is tracked by the Invesco S&amp;P 500 Equal Weighted ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>), could outperform the traditional market cap-weighted index (where larger companies have more weight) over the next decade. 
They estimate the equal-weighted index could surpass the cap-weighted index by an annualized margin of 200 to 800 basis points (2-8%).
Adding to the challenges facing the S&amp;P 500, Goldman Sachs predicts that stocks will face increasing competition from bonds in the years ahead. 
With the current 10-year U.S. Treasury yield around 4% and inflation expectations of 2.2% over the next decade, Goldman Sachs estimates that the S&amp;P 500 has a 72% probability of underperforming bonds over the next 10 years.
Furthermore, the analysts give the S&amp;P 500 a 33% chance of underperforming inflation during this period.
Read Now:
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<li><a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41402089/goldman-sachs-highlights-20-top-short-squeeze-opportunities-for-q3-earnings-season">Goldman Sachs Highlights 20 Top Short-Squeeze Opportunities For Q3 Earnings Season</a></li>
</ul>
Image: Shutterstock

Bonds

Federal Reserve

Goldman Sachs Predicts Bleak Long-Term S&P 500 Returns As Market Concentration Hits 'Highest Level In 100 Years'

Monday, Super Micro Computer, Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SMCI#NASDAQ">SMCI</a>) stock gained after it announced a complete liquid cooling solution that includes powerful Coolant Distribution Units (CDUs), cold plates, Coolant Distribution Manifolds (CDMs), cooling towers, and <a target="_blank" href="https://www.benzinga.com/pressreleases/24/10/n41206584/supermicro-solidifies-position-as-a-leader-in-complete-rack-scale-liquid-cooling-solutions-current" rel="noreferrer noopener">end-to-end management software</a>.
Supermicro said it recently deployed over 100,000 GPUs with liquid cooling solution (DLC) for some of the largest AI factories ever built, as well as other Cloud Service Providers (CSPs).
Supermicro&#8217;s ultra-dense server with dual top-bin CPUs and 8 Nvidia Corp (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>) HGX GPUs in just 4U with liquid cooling quadruples the computing density, allowing organizations to run larger training models with a smaller data center footprint.
Also Read: <a target="_blank" href="https://www.benzinga.com/markets/equities/24/10/41162435/supermicro-and-fujitsu-partner-for-ai-powered-server-whats-in-store" rel="noreferrer noopener">Supermicro And Fujitsu Partner For AI-Powered Server: What&#8217;s In Store?</a>
This complete solution reduces ongoing power costs, Day 0 hardware acquisition, and data center cooling infrastructure costs.
However, Supermicro stock has been under pressure since the U.S. Department of Justice started probing the company following an <a target="_blank" href="https://www.benzinga.com/news/24/09/41052423/super-micro-computer-stock-falls-on-report-of-doj-probe-what-to-know" rel="noreferrer noopener">August&nbsp;short report</a> from Hindenburg Research.
The short report highlighted allegations by former employee Bob Luong over the AI server company&#8217;s inappropriate revenue recognition policies and the re-hiring of employees the company had terminated due to involvement with past accounting violations.
Supermicro had inked a settlement with the SEC in 2020, paying $17.5 million without admitting or denying the accusations.&nbsp;
Needham analyst Quinn Bolton flagged Supermicro, a first mover in rack-level liquid cooling solutions, with its liquid cooling as an opportunity for further <a target="_blank" href="https://www.benzinga.com/news/24/09/40926422/super-micro-poised-for-expansion-as-gross-margin-concerns-ease-internal-control-risks-priced-in-anal" rel="noreferrer noopener">market share expansion</a>.
Bolton noted that the stock has priced in most of the risk associated with the&nbsp;board&#8217;s review of internal controls following the short report.
Supermicro stock is up 61% in the last 12 months. Investors can gain exposure to the stock through Vanguard Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VUG#NYSE">VUG</a>) and Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>).
Price Action:&nbsp;SMCI stock is up 13.80% at $46.94 at the last check on Monday.
Also Read:
<ul>
<li><a href="https://www.benzinga.com/news/24/09/41012678/super-micro-unveils-next-gen-servers-powered-by-intels-latest-xeon-chips" target="_blank" rel="noreferrer noopener">Super Micro Unveils Next-Gen Servers Powered by Intel&#8217;s Latest Xeon Chips</a></li>
</ul>

Movers

SMCI

What's Going On With Super Micro Computer Stock On Monday?

Market strategist Jay Woods spoke with Benzinga ahead of Jerome Powell's<a href="https://www.benzinga.com/etfs/sector-etfs/24/08/40529209/jerome-powell-time-has-come-for-interest-rate-cuts-cooling-in-labor-market-unmistakable"> Jackson Hole speech Friday</a> to discuss a variety of topics: rate cuts, what the election means for stocks and <a href="https://www.benzinga.com/topic/small-caps">what's next for small caps</a>.
<h2 class="wp-block-heading">Fed Rate Cut</h2>
Woods says the Fed was late to raise rates and has been late to cut rates.
The <a href="https://www.benzinga.com/top-stories/24/08/40492530/fed-minutes-reveal-plausible-case-for-interest-rate-cut-as-policymakers-cheer-inflation-progress">expected rate cut </a>by the Federal Reserve in September comes as investors try to predict what will happen to the stock market — especially with the 2024 presidential election playing out before the end of the year.
The market has not had an August/September stretch-up in the past three years, Woods said, adding that he doesn't believe it will happen by the end of September.
"Most markets bottom in October," Woods said on the Aug. 22 edition of <a href="https://www.benzinga.com/premarket-prep">PreMarket Prep</a>.
When asked about the likelihood of a rate cut, Woods said there is 0% chance of no cut and that a cut should've already happened. He predicts the rate cut will more than likely be 25 basis points. A 50-point cut could play out too aggressively as a political move.
"Whatever happens, one side of the aisle is going to condemn him for cutting,&#8221; he said. 
The question for investors, Woods said, is if the rate cut is &#8220;already baked into stock prices.&#8221; 
&#8220;We already bought the rumor,&#8221; he added, citing how the other side of the popular phrase is &#8220;sell the news&#8221; and that's what might happen first.
Smart investors who bought the dip on Aug. 5 may want to lighten up as the market could get choppy and trade sideways, he warned. "I don't expect us to explode upward immediately on that initial rate cut on the 18th."
See below.
<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"> 
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<iframe loading="lazy" title="Jay Woods, CMT - Fed Rate Cuts" width="500" height="281" src="https://www.youtube.com/embed/emvAQLsC86k?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>
</div>
</figure>
<h2 class="wp-block-heading">Small Cap Rally</h2>
Woods said when rates are cut in a non-recession time, the market typically rallies three months later, six months later and 12 months later.
One investment idea that often does well is small caps, an idea that Woods has been pounding the table on and shared <a href="https://www.benzinga.com/etfs/broad-u-s-equity-etfs/24/07/39846454/exclusive-market-strategist-jay-woods-says-rotation-in-small-caps-is-just-starting-rus">with Benzinga previously.</a>
Woods said small-cap stocks, which are commonly tracked by the iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>) have yet to make their all-time highs again.
"When they move, they move quickly," Woods said. Recall how small caps moved up 27% from October to December in 2023.
"The setup is there for small caps,&#8221; he added.
The past month has seen consumer staples and utilities outperform the magnificent seven stocks with the equal weight S&amp;P 500, which is tracked by the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>), outperforming the S&amp;P 500, which is tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>).
"This is healthy, but it's not sexy."
Read Also: <a href="https://www.benzinga.com/etfs/sector-etfs/24/08/40515453/exclusive-trump-or-harris-12-stocks-2-etfs-could-win-no-matter-whos-president-says-market-strate">EXCLUSIVE: Trump Or Harris? 12 Stocks, 2 ETFs Could Win No Matter Who&#8217;s President, Says Market Strategist</a>
Past Election Year Trends: Woods said he took a look at the 2016 and 2020 years to predict what happens in 2024, with 2020 having an outlier in the COVID-19 pandemic.
The Volatility Index, commonly referred to as the VIX, spiked early in both years and then again in September before the election.
"Headlines are going to cause a little angst," Woods said.
Woods recalled that both the 2016 and 2020 elections, each one involving Trump, were controversial.
"We rallied from Election Day into the end of the year," Woods said for 2016 and 2020 with Trump involved in both cases. "I think the setup is there."
SPY, IWM Price Action: The SPDR S&amp;P 500 ETF Trust is up 1% to $559.31 on Friday.
The iShares Russell 2000 ETF is up 3% to $219.69 on Friday.
Watch the full interview with Jay Woods on<a href="https://www.youtube.com/watch?v=vGXosi2hWTQ"> PreMarketPrep here</a>.
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EXCLUSIVE: Market Strategist On Small Cap Rally, Election Year, Fed Cuts And What's Next – 'I Think The Setup Is There'

Consumer price index data this week provided encouraging signs that American inflation is moving ever closer to the Federal Reserve&#8217;s <a href="https://www.benzinga.com/government/24/06/39470021/janet-yellen-says-inflation-to-come-down-to-feds-2-target-by-2025-dismisses-possibility-of-us-recess">much-discussed 2% target</a>.
This fueled speculation <a href="https://www.benzinga.com/economics/macro-economic-events/24/07/39728268/inflation-slows-more-expected-to-3-in-june-heightens-expectations-for-rate-cuts-t">about interest rate cuts.</a>
The annual inflation rate dropped more than expected to 3% in June 2024, reaching its lowest level since March 2021. Remarkably, the monthly inflation rate showed a contraction of 0.1% for the first time since May 2020.
Investors and economists increased their convictions on the Fed's readiness to cut <a href="https://www.benzinga.com/general/politics/24/07/39731800/biden-cheers-inflation-progress-rate-cut-chorus-grows-louder-among-5-economists-this-is-just-wha">interest rates in September</a>, pushing market-implied odds of a cut to over 90%.
A <a href="https://www.benzinga.com/economics/macro-economic-events/24/07/39748331/june-producer-inflation-exceeds-forecasts-restrains-investor-euphoria-following-c">higher-than-expected producer inflation</a> data report Friday did little to alter these expectations significantly, as the <a href="https://www.benzinga.com/markets/equities/24/07/39750466/us-consumer-morale-dips-more-than-expected-in-july-sentiment-remains-stubbornly-subdued">latest consumer sentiment report</a> from the University of Michigan confirmed subdued morale and a decline in inflation expectations.
In the markets, sectors previously impacted by high interest rates — and have not yet priced in potential reductions in borrowing costs — outperformed the tech sector, which had already largely <a href="https://www.benzinga.com/markets/asia/24/07/39733667/inflation-data-sparks-rush-for-gold-real-estate-treasuries-yen-traders-see-september-rate-cut-as-don">anticipated such rate cuts.</a>
The equal-weight S&amp;P 500, as tracked by the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) outpaced the cap-weighted S&amp;P 500, monitored through the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), while value stocks outperformed their growth counterparts. 
Both the real estate sector — as tracked by the Real Estate Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLRE#NYSE">XLRE</a>) – and the Russell 2000 small-cap index — as replicated by the iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>) – achieved their strongest week of the year.
Chart Of The Week: Russell 2000 Enjoyed Strongest Week Since October 2023
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="488" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/12143443/image-17-1024x488.png" alt="" class="wp-image-434055" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/12143443/image-17-1024x488.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/12143443/image-17-300x143.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/12143443/image-17-768x366.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/12143443/image-17-1536x732.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/12143443/image-17.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
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Rare Market Dynamic: On Thursday, the Russell 2000 surged 3.63% while the Russell 1000 large-cap index fell 0.66% — the fifth time in history that the performance difference between the two indexes exceeded 4%. It has previously occurred during major market downturns. This time it came near an all-time high <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/07/39739225/the-market-did-something-today-that-has-only-occurred-4-times-in-history">for the S&amp;P 500.</a>
Weight-Loss Pill: Pfizer Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PFE#NYSE">PFE</a>) announced advancements in its once-daily weight-loss pill, danuglipron, showing a favorable pharmacokinetic and safety profile. The pharma giant plans to conduct dose optimization <a href="https://www.benzinga.com/general/biotech/24/07/39730398/pfizer-advances-once-daily-weight-loss-pill-as-it-catches-up-to-tap-the-lucrative-market">studies in late 2024.</a>
Tech Stock Poll: Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), Microsoft Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NYSE">MSFT</a>), Meta Platforms Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/META#NASDAQ">META</a>) and Alphabet Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>) all hit 52-week highs. A Benzinga poll reveals investor preferences:
<ul>
<li>Microsoft led with 32%</li>
<li>Apple at 29%</li>
<li>Google at 23%,</li>
<li>Meta at 16%. </li>
</ul>
Investors cited artificial intelligence growth potential and valuations as key <a href="https://www.benzinga.com/etfs/broad-u-s-equity-etfs/24/07/39716688/apple-microsoft-meta-google-which-would-you-buy-at-all-time-high-investor-poll-reveals">factors influencing their choices</a>.
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Image: Shutterstock

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XLRE

Inflation Drop Fuels Rate Cut Speculation, Investors Shift To Sector Laggards, Russell 2000 Surges Over 3.6%: This Week In The Markets

Joshua Brown of Ritholtz Wealth Management named Pfizer Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PFE#NYSE">PFE</a>) as his final trade on the latest edition of CNBC's &#8220;<a href="https://www.cnbc.com/video/2024/07/11/final-trades-pfizer-l3harris-tech-the-rsp-and-gdx.html">Halftime Report Final Trades</a>.&#8221; 
On Thursday, Pfizer announced it will advance the development of Danuglipron. The company selected the once-daily weight loss drug for continued advancement based on an <a href="https://www.benzinga.com/news/24/07/39736144/why-pfizer-stock-is-moving-higher-on-thursday">ongoing pharmacokinetic study</a>.
"Obesity is a key therapeutic area for Pfizer, and the company has a robust pipeline of three clinical and several pre-clinical candidates," said Mikael Dolsten, chief scientific officer &amp; president, Pfizer Research and Development.
Bryn Talkington of Requisite Capital Management picked Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>). &#8220;I think the market will continue to <a href="https://www.benzinga.com/quote/RSP">broaden out,&#8221; she added</a>.
Bill Baruch of Blue Line Capital named VanEck Gold Miners ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GDX#NYSE">GDX</a>) as his final trade.
Don't forget to check out our <a href="https://www.benzinga.com/premarket/">premarket coverage here</a>
Stephanie Link of Hightower picked L3Harris Technologies, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LHX#NYSE">LHX</a>) as her final trade.
L3Harris Technologies is scheduled to release its second quarter 2024 financial results on Thursday, July 25, after the closing bell. Analysts expect the company to report quarterly earnings at $3.16 per share, up from $2.97 per share in the year-ago period. The company is projected to post quarterly revenue of $5.29 billion, compared to $4.37 billion <a href="https://www.benzinga.com/quote/LHX/earnings">in the year-earlier quarter.</a>
Price Action:
<ul>
<li>L3Harris Technologies shares gained 1.4% to close at $230.34 on Thursday.</li>
<li>Invesco S&amp;P 500 Equal Weight ETF rose 1.2% during Thursday's session.</li>
<li>VanEck Gold Miners ETF gained 2.8% on Thursday.</li>
<li>Pfizer shares gained 1.1% to close at $28.66 during Thursday's session.</li>
</ul>
Check This Out: 
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