The second half of 2018 is underway.
And the markets kicked off the third quarter with a listless trading session that did, however, see each of the major averages finish in the green.
The Nasdaq logged the day’s biggest gains, rising more than 0.7% as tech stocks continue to be market leaders this year, with the tech-heavy index up more than 9.5% so far this year while the Dow is still in red figures.
On Tuesday, the biggest economic news will be the June report on auto sales, which is expected to sales during the month hit an annualized rate of 17 million vehicles. The May report on factory orders is also set for release in the morning.
The earnings calendar, as we noted over the weekend, will feature no major companies reporting results.
And don’t forget that Tuesday will be a half-day in the U.S. equity market, with the New York Stock Exchange closing trading for the day at 1:00 p.m. ET. Bond markets will also be closing early, with that market settling at 2:00 p.m. ET.
U.S. auto sales will be the main economic highlight on Tuesday, which is a half-day for markets ahead of the July 4th holiday. (AP Photo/David Zalubowski)
More than all the gains
If you’ve heard it once, you’ve heard it a million times — tech stocks are driving this market.
And in a note to clients published late last week, Goldman Sachs’ equity strategy team led by David Kostin made clear just how much of the market’s gains the FAAMNG stocks are responsible for. And the answer is more than all of the gains.
Through last Thursday’s close, Amazon (AMZN) — which has gained 45% so far this year — was responsible for 36% of the index’s gain so far this year.
To some, this sort of dynamic where a few stocks are driving a large percentage of the gains on the index level is disconcerting. This worry may hinge on something like a worry that the market is hanging by threads held tight by just a few companies. If Amazon catches a cold, everyone gets sick.
Except that a few stocks driving the overall market’s performance is not a unique trait during strong bull runs.
As we noted last year, the performance of Facebook, Amazon, Alphabet, Netflix, and Microsoft accounted for a large percent of the S&P 500’s gain during a time when the market was up strongly. But this performance was not out of step with what was observed during strong market years like 2007, 2005, 1999, and 1993.
Additionally, in 2015 the original FANG names were coined as they, along with just a handful of other names, accounted for more than all of the S&P 500’s gains. Meaning that FANG along with NOSH — Nike (NKE), O’Reilly (ORLY), Starbucks (SBUX), and Home Depot (HD) — were positive on an overall basis while the more than 490 other members of the benchmark index were collectively in the red for the year.
And since this concerning performance concentration was introduced as a feature of this market, the S&P 500 is up 30%.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland