The Magnificent-7 stocks have been leading the charge of the current bull market that started on October 12, 2022. They are all in the Nasdaq 100, which is up 117.9% so far since the start of the bull market, beating all the other major US stock market indexes (chart).
The Mag-7's market capitalization share of the S&P 500 has doubled during the current bull market from 16% to 32% (chart). The stock market has indeed become more concentrated, but that doesn't mean that the rest of the market has languished. The S&P 493, the S&P 400 MidCaps, and the S&P 600 SmallCaps have had impressive gains too, just not as impressive as the Mag-7 and the Nasdaq 100.
The S&P 1000 SMidCaps have clearly lagged behind the S&P 500 since the start of the current bull market. They outperformed last Friday on expectations of another Fed easing cycle. However, they've disappointed many times before since the second half of the 2010s (chart). We aren't convinced they are set to outperform the S&P 500 on a sustainable basis. However, we would take some of the profits in the large-cap sectors we've favored (Information Technology, Communication Services, Industrials, and Financials) and rotate into their SMidCap equivalents, which have lower valuation multiples.
