CG Capital Markets

Nov 6, 2023

Small caps could see a bounce next year syahrir maulana The S&P 500 is considered “still too top heavy” but small cap stocks might see a relative bounce, according to CG Capital Markets’ U.S. Equity Research report, published on Monday. As of Nov. 2, the top 10 stocks are driving the S&P 500 ( SPX ), representing 33.7% of the market cap. It is the highest since the early 1970s. The top 10 stocks, by their weight index, are Apple ( AAPL ), Microsoft ( MSFT ), Amazon.com ( AMZN ), Nvidia ( NVDA ), Alphabet Class A ( GOOGL ), Tesla ( TSLA ), Meta Platforms ( META ), Alphabet Class C ( GOOG ), Berkshire Hathaway ( BRK.B ), and United Health Group ( UNH ). The Russell 2000 ( IWM ) is bouncing off a new low — below 0.40 — relative to the S&P 500 ( SPX ). The small caps should see a relative bounce, according to the report. “EPS assumptions and valuations remain too elevated for the major capitalization indices given a recessionary economic outlook,” said CG Capital analysts. “Clearly, the high concentration in the S&P 500 ( SPX ) has skewed the valuation data of everything else, but until that discrepancy is resolved, we expect the volatility to continue.”