The Market is Up but Which Market?

Bloomberg notes that the correlation between the Dow and S&P 500 is at a six-year low. This is interesting because the Trump Rally has been skewed toward industrial stocks. Those stocks have rallied much more than the overall market. We tend to forget that the Dow Jones Industrial Average is in fact, an index of industrial stocks.

For the most part, the difference between the two is tiny. Not now.

The Dow is set to outperform its broader counterpart on an annual basis for the first time since 2011, rallying 10 percent this year, while the S&P 500 has climbed 7.9 percent. The day before the election they were pretty much neck-and-neck, with the Dow up 4.8 percent in 2016 and the S&P 500 headed for a yearly advance of 4.3 percent.

Here’s the Dow in red versus the S&P 500 in blue over the last several weeks.

Posted by Eddy Elfenbein on December 6th, 2016 at 12:39 pm

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