Market forecaster Jim Bianco, president and macro strategist at Bianco Research, explained how the rally in the S&P 500 index during the early part of the year was mostly led by a couple of stocks and did not represent the broader market performance.
“On February 2 (the day after the Fed presser and the day before the booming 517k payroll report), the S&P 500 was up over 8% for the year (black line). What was missing in most of the analysis is the majority of the overall S&P 500’s gains were just the eight FAANG+ M N T stocks (names on the chart), show in red,” Bianco tweeted.
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Price Action: Bianco is referring to how the so-called FAANG stocks that include Meta Platforms Inc (NASDAQ:META), Apple Inc (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Netflix Inc (NASDAQ:NFLX), and Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) coupled with Microsoft Corp (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA) and Tesla Inc (NASDAQ:TSLA) shares boosted the market in January.
However, since the beginning of February, the S&P 500 index has lost over 2.5% as stronger economic data and higher-than-expected inflation sparked concerns the Federal Reserve will have to continue with its rate hikes for longer than expected.
On a year-to-date basis, the S&P 500 index is up just 3.82%. The SPDR S&P 500 ETF Trust (NYSE:SPY) has gained 4.09% during the period while the Vanguard Total Bond Market Index Fund ETF (NASDAQ:BND) has lost 0.4%.
Bianco compares this movement with the meme stock frenzy in 2021. “In other words, it was just like 2021, meme stocks and a handful of “ARK” stocks drove the market. And speaking of ARK, January was its best year ever, more than 20%,” he said.
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