It’s Friday the 13th, but the bulls should be feeling a bit lucky, given the S&P 500 stands at a five-month high.
Sure, today’s earnings from big banks could cast a hex on this market. Plus, we’ve got that U.S.-U.K. “special relationship” turning extra special.
But our call of the day may embolden the bulls. It tackles a hot topic — this FAANG-tastic stock market’s top heaviness — and it comes from A Wealth of Common Sense’s Ben Carlson, who also throws a bone to the bears.
“The stock market is not currently being driven by just a handful of stocks,” writes Carlson, Ritholtz Wealth Management’s director of institutional asset management.
One “tell-tale sign that this isn’t the case” comes from the fact that small-cap stocks are outperforming this year, he says. The small-fry Russell 2000 is up 10% in 2018, besting the S&P’s gain of 4.7%.
Carlson also points to a key indicator for market breadth — the NYSE Advance-Decline Line. He offers the chart below that plots that gauge’s moves alongside the S&P’s action.
“If there were only a few stocks rising, you would see a large divergence between these lines,” he writes. “Instead, we see the advance-decline fairly in line with the stock market. This tells us that there are far more stocks rising than just a few of the biggest names.”
The Michigan-based portfolio manager gives a few caveats as well, including:
• “We certainly could see what many would call an overdue correction in tech stocks that brings down the rest of the market.”
• “If you’re invested solely in a total market or S&P 500 index fund, then yes, your returns will likely be driven by a handful of stocks. This is simply the way market-cap weighting works.”
Go here to read his full post. (H/t Abnormal Returns)
Don’t miss: Stock gains aren’t just a tech story, but they’re mostly a tech story
And see: The tech sector delivered all of the stock market’s gains so far in 2018
Key market gauges
Futures for the Dow YMU8, +0.06% , S&P 500 ESU8, +0.01% and Nasdaq-100 NQU8, +0.04% are little changed, after the Dow DJIA, +0.91% , S&P SPX, +0.87% and Nasdaq Composite COMP, +1.39% closed with gains yesterday, with the tech-laden Naz scoring an all-time high. The three gauges are on track for weekly rises of more than 1%, as of Thursday’s close.
European stocks SXXP, +0.23% are trading mostly higher, after Asia largely finished with gains. Oil CLQ8, -0.14% and gold GCQ8, -0.55% are dropping, as the dollar index DXY, +0.34% climbs.
See the Market Snapshot column for the latest action.
Here comes 2,800 (shown in red) again.
“The S&P 500 is knocking on the 2,800 door again, and I think we have a much better chance of breaking through this time,” technical analyst Mark Arbeter says in a note to clients, as the index sits at its highest closing level since Feb. 1.
The Arbeter Investments president is encouraged in part by that NYSE Advance-Decline Line mentioned earlier. Meanwhile, Elliott Waver Ari Gilburt has been predicting a rally toward 2,800, but then an August pullback.
Read more: The stock market’s next step could tip the balance toward bears — or bulls
Trump and May in Brussels Thursday — caption contest?
“If they do a deal like that, we would be dealing with the European Union instead of dealing with the U.K., so it will probably kill the deal.” — President Donald Trump has teed off on British Prime Minister Theresa May’s so-called soft Brexit plan.
He is saying that approach would wreck any potential trade pact between the U.S. and the U.K.
His comments appeared late Thursday in the U.K.’s Sun newspaper, which said it had interviewed the president just before he arrived in the land of warm beer. The pound GBPUSD, -0.5073% is slumping following the comments, even as Trump today is sounding friendlier and saying the countries’ relationship is “very, very strong.”
J.P. Morgan Chase JPM, +0.43% just posted an earnings beat, and Wells Fargo WFC, -0.07% and Citigroup C, +0.88% are also on tap before the opening bell.
Read more: Banks’ earnings are expected to shine, but their stocks may not
Commerce Secretary Wilbur Ross has agreed to sell all of his stocks after acknowledging that he failed to sell some holdings as required by ethics agreements.
A jury in St. Louis found Johnson & Johnson JNJ, +1.20% should pay $4.7 billion in damages to 22 women and their families who blamed ovarian-cancer cases on asbestos in the company’s iconic baby powder.
There is still buzz around yesterday’s extremely contentious hearing on Capitol Hill featuring the FBI’s Peter Strzok. He testified that he didn’t leak damaging information about Trump before the election.
China’s trade surplus widened sharply in June, as tensions with the U.S. ramped up. Meanwhile, a Shenzhen hotel is denying a report that it was charging Americans an extra 25%.
The Justice Department has appealed a key antitrust ruling that had given a green light to AT&T T, +1.13% buyout of Time Warner.
On the U.S. data front, a report on import and export prices is due before the open, and a reading on consumer sentiment is slated to hit once trading gets underway.
The Federal Reserve has a couple of things for us: a monetary policy report, plus the Atlanta Fed’s Raphael Bostic doing a Q&A with CPAs. Did he lose a bet or something?
Check out: MarketWatch’s Economic Calendar
Tesla TSLA, -0.71% news: Elon Musk reportedly violated federal labor law by urging employees not to form a union, and the car maker has hit a key threshold for deliveries, so a tax credit will be phased out.
Bitcoin BTCUSD, +1.13% is trading around $6,200 as fans highlight a key anniversary:
It’s as if Serena Williams, in a Wimbledon final again, never left tennis.
A former Georgia Bulldog faces an ex-Illinois star in a Wimbledon men’s semifinal.
Oregon is about to have the very last Blockbuster location in the U.S.
Here’s how Apple’s AAPL, +1.68% Macbook Pro update ignores big concerns from users.
Nicotine and millennials and a hedge fund: The Juul device’s rise.
Fiat workers are striking over Ronaldo’s new deal.
“Do not eat this cereal,” says the CDC:
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.
Or Follow MarketWatch on Twitter or Facebook.
And sign up here to get the Friday email highlighting 10 of the best MarketWatch articles of the week.