Don’t let the stock market’s relatively calm façade fool you. There are big moves taking place under the surface. Scott Rubner, head of equity and equity derivatives strategy at Citadel Securities, pointed out that while the S & P 500 has fallen 1.4% over the past 30 days, individual stocks are moving far more. The average S & P 500 stock has moved 10% in either direction during that time, he said. That dispersion falls in the 97th percentile of the past 30 years. There’s more, too. Michael Batnick of Ritholtz Wealth Management posted on X on Feb. 12 that, over the previous eight sessions, 115 S & P 500 stocks had suffered single-day declines of 7% or more. What this trend signals is a big rotation into cyclical and value stocks is well under way. “Capital is not exiting risk — it is being aggressively reallocated,” wrote Rubner. “Capital continues to rotate away from the narrow mega-cap monolith that has defined U.S. index leadership and toward a more reflationary backdrop characterized by accelerating nominal growth and real-asset outperformance — a dynamic we expect to remain in place through 2026.” Tech, communication services and consumer discretionary — sectors that are home to the ” Magnificent Seven ” — are lower so far in 2026. The first two groups have lost 4.5% and 3.1%, respectively, while consumer discretionary is off by 5%. Cyclical sectors such as energy and materials are leading the S & P 500, rising 19.7% and 15.2%, respectively, for the year. Industrials are up nearly 13% in 2026. Small caps are also outpacing large-cap stocks. The S & P 500 is flat for the year while the Russell 2000 has climbed 6.6%. .SPX .RUT YTD mountain Russell 2000 index in 2026 “This relative strength is consistent with a broader reallocation underway — one that extends beyond a simple cyclical bounce and instead reflects a reassessment of where durable value accrues in an AI-intensive economy,” Rubner said. To be sure, the key to keeping the market afloat amid this big rotation is the retail investor. “Retail participation remains historically elevated, ETF flows are tracking at one of the strongest early-year paces on record and liquidity has thinned during episodic selloffs,” said Rubner. In other words, the market could face trouble ahead should individual investor enthusiasm ever fade.
Calm S&P 500 performance masking historic turbulence in stocks so far this year
view original post