Smaller Stock Turn-Around?

Chart of the Week for December 10-16, 1999

The Wilshire 5000 Index is the broadest measure of US stock market performance. It contains the stocks of all companies that are headquartered in the United States. The larger stocks that comprise the S&P 500 Index account for nearly 80% of the Wilshire 5000.

The Wilshire 5000 trailed the S&P 500 Index for the first ten months of 1999, but that has changed. In the last five weeks, its cumulative year-to-date performance has pulled ahead of that of the S&P 500 Index. This tells us that mid- and small-size stocks have outperformed the larger S&P 500 stocks since mid-November. As of December 8, the Wilshire 5000 has about a 2% advantage over the S&P 500 year to date.

While five weeks is not enough to confirm a trend, we do know that large-cap dominance will not last forever. It will be interesting to monitor this relationship in the coming months to see if a rotation to mid- and smaller-cap stocks emerges.

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