Stock Market Broadens Out in Second Quarter

Chart of the Week for July 14-20, 2000

After several consecutive quarters of narrowness, stock performance is becoming more balanced.

In 1999 and the first quarter of 2000, two-thirds of all stocks in the S&P 500 Index had lower returns than the Index. That meant that a minority of high-performing stocks were masking generally weak performance.

In the second quarter of 2000, we saw an important shift. The average stock had a higher return than the Index. This is an interesting development, even though the S&P 500 return was negative, because it means that market leadership was not concentrated in a handful of stocks.

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