U.S. stock market's 2024 rally gets 'healthier' as breadth broadens and small-caps soar

MW U.S. stock market's 2024 rally gets 'healthier' as breadth broadens and small-caps soar

By Christine Idzelis

Recent rally in stocks broadens beyond Big Tech

The U.S. stock market's breadth is improving, a positive sign for the momentum of the rally so far this year, according to BofA Global Research.

Small-cap equities have surged over the past week, while the S&P 500 and Dow Jones Industrial Average each booked new all-time closing highs on Tuesday. The small-cap-focused Russell 2000 index ended Tuesday at its highest value since January 2022, rising for five straight days. according to Dow Jones Market Data.

It seems that "the summer 2024 rally is getting healthier," said Stephen Suttmeier, technical research strategist at BofA, in a research note dated July 16.

The S&P 500, a widely followed gauge of U.S. large-cap stocks, is up more than 17% this year based on Wednesday morning trading and has climbed 2.6% so far this month, according to FactSet data, at last check.

The index has heavy exposure to Big Tech stocks, with massive gains from Nvidia Corp. $(NVDA)$, Facebook parent Meta Platforms Inc. (META) and Google parent Alphabet Inc. $(GOOGL)$ $(GOOG)$ helping to fuel its 2024 rise, according to FactSet data.

Meanwhile, the S&P 500's advance-decline line, which is an indication of market breadth, hit "a new high to confirm the summer rally" in the 5,600s, Suttmeier said. The advance-decline line is a measure that considers the number of stocks advancing and declining.

The U.S. stock market was trading mostly lower Wednesday, with the S&P 500 SPX down 1.2% at around 5,600, FactSet data show, at last check. The technology-heavy Nasdaq Composite COMP, which rose to a record closing high on July 10, was dropping 2.4% in Wednesday morning trading, while the blue-chip Dow DJIA was rising 0.2%.

As for small-caps, the Russell 2000 index RUT was shedding 0.5% Wednesday morning, pausing its winning streak.

The Russell 2000 surged 11.5% in the five trading days through Tuesday, marking a remarkable run for U.S. small-cap equities. The rally has propelled the small-cap-focused index to a year-to-date gain of 11.1% based on Wednesday morning trading, FactSet data show, at last check.

-Christine Idzelis

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July 17, 2024 11:15 ET (15:15 GMT)

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