Stock market concentration became more extreme during the quarter. The top 10 stocks in the S&P 500 make up just over 30% of the index which is the highest in history. The catalyst for a change in market leaders likely comes from a regime or market/economic change. Here are 3 things you need to know:

1. In Q2, the S&P 500 was up 4.28% with the top 10 stocks contributing 5.60%, meaning the stocks outside of the top 10 in aggregate were negative. Of the 15.29% total return of the S&P 500 through the first half of the year, the top 10 stocks in the index have contributed 11.13% or nearly 73%, powered by a +37% advance for the Magnificent 7 and a stunning +149.5% return for Nvidia.
2. The small-cap Russell 2000 only returned +1.7% in the first half and was down -3.3% in Q2.
3. The 10 yr. Treasury ended Q2 at 4.37% after starting the year at 3.88%. The bond market continues to price in two rate cuts to end the year in September and December.

Sources: J.P. Morgan Asset Management – Economic Update; Bureau of Economic Analysis (www.bea.gov); Bureau of Labor Statistics (www.bls.gov); Federal Open Market Committee (www.federalreserve.gov); Bloomberg; FactSet.

Indices:

• The Bloomberg Barclays Aggregate Bond Index is a broad-based index used as a proxy for the U.S. bond market. Total return quoted.
• The S&P 500 is designed to be a leading indicator of U.S. equities and is commonly used as a proxy for the U.S. stock market. Price return quoted.
• The MSCI ACWI ex-US Index captures large and mid-cap representation across 22 of 23 developed market countries (excluding the U.S.) and 27 emerging market countries.  The index covers approximately 85% of the global equity opportunity set outside the U.S. Price return quoted.
• The MSCI Emerging Markets Index captures large and mid-cap segments in 26 emerging markets. Price return quoted (USD).

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