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A Tale of Two Markets


There’s tech, and there’s the rest

Investors in tech stocks these days are a wildly happy bunch. Everybody else? Not so much.

The gap between shares of tech companies (as represented by the Nasdaq 100) and the average stock in the broader market (represented by the S&P 500 equal weight index) has widened to 17.9 percentage points year-to-date, as seen in the chart below. This is the second-largest YTD outperformance of the Nasdaq 100 since 1999.

The upshot: Portfolios lacking concentrated positions in just a handful of the largest tech stocks may be lagging this year. Given how top-heavy this current market environment is, outperformance in diversified portfolios has been hard to come by so far in 2023. 

Source: Bloomberg, as of 04/11/2023

It’s a massive—and rapid—reversal from 2022, of course, when the tech-heavy Nasdaq suffered the worst return of the major market indices (-33%) and lagged the average S&P 500 stock by 21 percentage points.

The big question: Will tech continue to leave the rest of the market in the dust going forward? All eyes will be on first-quarter earnings reports over the next few weeks as investors assess expected growth and the likely impact of tighter credit conditions on tech firms’ results. Given the huge run-up in the past three months among many tech stocks—it might not take much bad news for today’s performance gap to narrow significantly.


This commentary is written by Horizon Investments’ asset management team.

Past performance is not indicative of future results.

The S&P 500 Index tracks the stock performance of 500 of the largest companies listed on stock exchanges in the United States. The Nasdaq-100 Index comprises 101 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock exchange. You cannot invest directly in an index.

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