Robinhood, Applovin jump as S&P 500 reshuffle boosts index entrants
Investing.com -- Bank of America said equities outpaced bonds and cash last month as investors embraced risk, with signs of market leadership widening beyond mega-cap stocks.
The S&P 500 gained more than 2% on a total return basis, compared with investment-grade corporate bonds up 1.06% and Treasury bills up 0.39%.
Gold was the best-performing asset class, rising 3.95%.
The equal-weighted S&P 500 rose 2.83%, beating the cap-weighted index, while the smallest 450 companies slightly outperformed the largest 50 by market capitalization.
Rest-of-world equities also outperformed the U.S., with Japan and Europe leading regional gains. In sector terms, seven of the S&P’s 11 groups beat the broader index, led by materials, healthcare, energy and communications. Technology, utilities, industrials and consumer staples lagged.
Value stocks gained 3.19%, outpacing growth at 1.12%, cutting growth’s year-to-date lead to about one percentage point.
BofA said value may retain leadership as the cycle shifts toward recovery, supported by cheaper valuations and lighter positioning.
Low-quality stocks also extended their rally, with weaker-rated companies outperforming higher-quality peers.
Small caps staged their best performance against large caps since July 2024, lifted by expectations of rate cuts and stronger-than-expected earnings.
The Russell 2000 rose 7.14%, topping the Russell 1000’s 2.10% gain. Microcaps advanced 9.25%.
BofA said near-term outperformance for small caps could persist, helped by dovish commentary from Federal Reserve Chair Jerome Powell and signs the U.S. economy is moving into recovery.
“We see potential for continued Value leadership going forward, given the possibility of a cyclical recovery and a likely flip in our Regime Indicator to Recovery, coupled with higher quality, more inexpensive valuations,” said BofA analysts.