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US stocks have staged a strong rebound since the March 23 low and are now less than 15% off all-time highs. However, investor angst and worry has remained in place through every step of the rally. While the COVID-19 virus is obviously still the big concern out there in the market, several others have also been recently brought up in our client interactions, including high market cap concentration atop the S&P 500, a surge in negative dividend actions by companies, and several sector weights approaching lows. Therefore, in this report, we thought it would be useful to discuss these concerns in turn and put some historical context behind each of them before jumping to any rash conclusions. While we do believe these data trends should certainly continue to be monitored in the coming months, our analysis suggests that they may not be the roadblocks to US stock market performance moving forward that many investors appear to be expecting.

Main Points:

  • Top-Heavy Market Cap Concentration in S&P 500 Not Necessarily a Bad Omen for Performance

  • Putting Dividend Actions Into Perspective

  • Sector Weights for Several Groups Approaching Lows


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Brian Belski Chief Investment Strategist

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