As Market Approaches All-Time High, Many Stocks Are Still Down
The S&P 500 is 40 basis points from its February 19 high, but many stocks are still lagging behind, according to Forbes.
The S&P 500 and the Dow Jones Industrial Average tend to perform similarly despite the Dow only having 30 stocks, instead of 500. Typically, investors refer to the S&P 500 as a market gauge. However, the Dow might be a better reference given the circumstances. The S&P 500 has almost recovered, but most stocks in the Dow are still down year-to-date.
Through August 13, 2020's session, only 10 of the 30 stocks in the Dow were up year-to-date. Apple, Microsoft, and Home Depot are up at least 29 percent. 20 out of the 30 stocks in the index are still down for the year, with 9 of them down at least 18 percent.
The 30 stocks in the Dow are not representative of the whole market, since many are cyclical. Tech stocks have been the main contributor to the stock market's rebound this year. This reveals the potential for these cyclical or non-tech stocks to catch up in the near future.
However, the new bull market isn't starting just yet. The market indexes may post gains as stocks continue to recover, but this is a result of fear waning off. The lagging stocks in the Dow are prime for a run-up.