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Perking Up!

Most stocks have been laggards this year, but that could be starting to change. 

It’s no secret that a minute group of tech stocks has essentially been responsible for the S&P 500’s 21.5% return this year. Fueled by the potential of artificial intelligence, shares of the so-called “Magnificent 7”—Amazon, Apple, Google, Meta, Microsoft, Nvidia, and Tesla—have soared 68.8% as a group in 2023.

What about the other 493 stocks in the S&P 500? They’re up just 7.5%, year to date.

But here’s something many investors haven’t noticed: Those laggards are perking up.

  • The “Meager 493” have rallied 5.2% since November 10th.
  • The “Magnificent 7” are up just 1.4% during that time.
  • Tesla is on the verge of falling out of the top 7 stocks by market cap, as Berkshire Hathaway (RIP Charlie Munger) is now nearly equal in weight.
Source: Bloomberg, as of 12/01/23
Source: Bloomberg, as of 12/01/23

The upshot: Market breadth—the number of stocks advancing versus the number declining, and an important driver of overall market returns—is improving as the rest of the index looks to catch up with those seven tech overperformers.

To be sure, this bump from the 493 is a new development. While we expect market breadth to keep improving at least through the end of the year, we are watching for signs of weakness in this emerging trend. In 2024, investors will likely need to see stronger fundamentals from these firms (or disappointing results from the “Magnificent 7” companies) for the 493 to build on the current rally.

The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States.  

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

Past performance is not indicative of future results. Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security. This report does not attempt to examine all the facts and circumstances that may be relevant to any company, industry, or security mentioned herein. We are not soliciting any action based on this document. It is for the general information of clients of Horizon Investments, LLC (“Horizon”). This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any analysis, advice, or recommendation in this document, clients should consider whether the security in question is suitable for their particular circumstances and, if necessary, seek professional advice. Investors may realize losses on any investments. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. All investing involves risk of loss.

Reference to an index does not imply that any account will achieve returns, volatility, or other results similar to that index. An index’s composition may not reflect how a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility or tracking error targets, all of which are subject to change. Individuals cannot invest directly in any index. Indices are unmanaged and do not have fees or expense charges, which would lower returns. The investments recommended by Horizon Investments are not guaranteed. There can be economic times when all investments are unfavorable and depreciate in value. Clients may lose money. This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed herein are our opinions as of the date of this document. These opinions may not be reflected in all of our strategies. We do not intend to and will not endeavor to update the information discussed in this document. No part of this document may be (i) copied, photocopied, or duplicated in any form by any means or (ii) redistributed without Horizon’s prior written consent. Forward-looking statements cannot be guaranteed. Other disclosure information is available at

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