U.S. Money Supply Growth Is Accelerating -- It Could Signal a Huge Change Coming in the Stock Market
Growing money supply usually bodes well for these companies to outperform.
If you've invested in the stock market over the last couple of years, you may have benefited from an incredible bull run in the S&P 500 (SNPINDEX: ^GSPC). The index climbed over 66% from the market bottom in October 2022 through the end of February this year.
But not every stock participated equally in that bull run. If you invested exclusively in large-cap stocks with growth fueled by artificial intelligence spending, you likely outperformed the index. If you invested in anything else, you probably didn't keep up. Just 27% of S&P 500 constituents outperformed the index in 2023, and 28% outperformed in 2024.
That's led to an increasingly concentrated market dominated by just a handful of names. But rising concentration is unsustainable. At some point, the mega-cap stocks that have led the market over the last two-plus years will start lagging as smaller companies pick up the slack. And one market indicator suggests that change could be right around the corner.
