The third quarter, the market continued and extended its
recovery from the Liberation Day crash. Increasingly, the “market”
as we have come to speak of it, has been dominated by a handful
of mega cap companies. Consequently, the equal-weighted S&P
500 (NYSE: RSP) is a far more accurate proxy for how the median
stock is performing, and the divergence between RSP and SPY
shows just how distorted the cap-weighted “market” has become.
This dynamic was highlighted in a recent Wall Street Journal
column by Spencer Jakab titled “Stocks are Up–But Maybe Not Your
Stocks.” This performance divide reflects the S&P 500’s extreme
concentration within a small subset of the largest companies, as
seen below:1