Small group of stocks driving S&P 500's narrow 2024 rally

The ongoing S&P 500 rally has been a particularly narrow one in 2024, with only about 12% of stocks rising by double-digit percentages and more than half of the large-cap index's stocks losing ground.

The S&P 500 gained 3.8% from 2023-end to Feb. 13 and rallied as much as 5.4% on the year before hotter-than-expected inflation data chilled hopes of a near-term interest rate cut by the Federal Reserve. Over this roughly month-and-a-half stretch, the gains have been concentrated on mega-cap tech stocks and few others.

Excluding seven of the S&P 500's largest stocks, the index has gained just 0.9% in 2024.

The group of mega-cap technology stocks known as the Magnificent Seven — Alphabet Inc., Amazon.com Inc., Apple Inc., Meta Platforms Inc., Microsoft Corp., NVIDIA Corp. and Tesla Inc. — have largely carried the index in 2024.

If all of the S&P 500's stocks had equal weight, the index would be down more than 0.4% from year-end 2023 through Feb. 13. The S&P 500 Equal Weight Index, which removes the effect of large companies exerting more influence on the overall index's performance, has been in negative territory for much of 2024.

Magnificent Seven's mixed results

While the S&P 500's largest stocks are driving higher returns for the index as a whole, performance within the small group has varied.

NVIDIA, for example, has rallied 45.6% since the end of 2023, the S&P 500's top performer so far in 2024. Tesla, meanwhile, has lost 25.9%, dragging down auto stocks and behind Archer Daniels Midland Co. as the worst performer.

Most S&P 500 stocks falling

While NVIDIA and Meta, the latter of which has rallied 30% since the end of 2023, have significantly outperformed the S&P 500 for the year, the majority of the index's constituents have not. Just 154 S&P 500 stocks had outperformed the broader index as of the Feb. 13 close.

In addition, only 242 stocks have risen at all in the year, and 27 of these stocks were up just 1% or less.

The majority of stocks in the S&P 500 — 256 stocks in total — lost ground between the end of 2023 and Feb. 13. Over the same stretch, 55 of the index's stocks — 11% of all the index's stocks — have lost 10% or more.

Still, the large-cap index continues to outperform smaller cap stocks. The Russell 2000, for example, lost 3.1% from the end of 2023 through Feb. 13, compared to the S&P 500's 3.8% gain.