Small-cap and defensive stocks rally as the S&P 500 nears record highs, reducing reliance on big tech gains.
The Nasdaq-100 Index has surged 18.5% year-to-date, outperforming the S&P 500 by 700 basis points, driven by strong tech sector performance. However, market breadth is widening, with small-caps and defensive stocks contributing to recent gains as the S&P 500 approaches record levels.
Tech stocks account for 37.6% of the S&P 500, but value and defensive sectors are showing renewed strength. This shift suggests a broader market rally, reducing concentration risk as investors diversify beyond growth-heavy names.
Vanguard ETFs targeting these trends are gaining momentum, offering exposure to sectors outside big tech. Analysts suggest evaluating these funds as market dynamics evolve.