The S&P 500 is poised for a new record high

Another closely followed index is about to complete a new record.

The S&P 500 Equal Weight Index (^SP500EW) is on track for its first record-high close since January 2022.

While the traditional S&P 500 (^GSPC) is market-cap weighted, meaning that a few large stocks have a greater impact on the index's performance, the Equal Weight Index values ​​all 500 stocks in the index equally.

As Goldman Sachs Equity Strategy Group highlighted in a January Yahoo Finance op-ed, this has led to outsized gains for the market-weighted index and undervaluation of the equal-weighted index.

Many on Wall Street believed this would lead to a broader stock market rally, rather than a few “spectacular” stocks dominating gains. Thursday's market action is the latest sign that the story may be paying off.

“The market is “narrow” β€” that is, only a handful of stocks are doing all the work β€” and is not an accurate read of things,” Baird Investments strategist Ross Mayfield wrote in a note to clients on March 1.

With slides from Apple ( AAPL ) and Tesla ( TSLA ), hiccups are brewing in the Magnificent Seven trade, which could be crucial for the 2024 stock market rally. Strategists believe there will be strength in other areas as the market finds support if technology trade lags.

“The strength we're seeing in the economy and in corporate America is much broader-based than AI trading, which has gotten a lot of attention recently,” Goldman Sachs equity analyst Ben Snyder told Yahoo Finance, pointing to the broader base of earnings growth. Seen during the fourth quarter report.

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Oppenheimer's John Stoltzfus proposed a similar view in a weekly note to clients on Sunday. He highlighted building broad-based strength as why he doesn't think the rally is over.

“This year is likely to further extend the stock market rally and see the stock markets climb further up the wall of anxiety,” Stoltzfus wrote.

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