The S&P 500 has managed to tread water in March despite the collapse of three U.S. banks and lingering worries about deposit flight from other regional lenders. But beneath the surface, signs of equity-market weakness abound. To be sure, the S&P 500
SPX,
+0.55%,
the most widely followed gauge of U.S. stock-market performance by investment professionals, has changed little in the weeks since March 8 — the day that Silicon Valley Bank first announced a doomed capital raise after being forced to sell a slug of Treasury and mortgage bonds at a loss. It was taken over by federal authorities two days later.
But the performance of the large-cap S&P 500 doesn’t reflect weakness in small-cap stocks and cyclical names, which haven’t held up nearly as well as the largest U.S. stocks by market capitalization. See: Why the worst banking mess since 2008 isn’t freaking out stock-market investors — yet Keith Lerner, chief market strategist at Truist, illustrated this dichotomy in performance between the biggest U.S.-traded stocks and the rest of the market in a note shared with clients and MarketWatch on Monday. According to Lerner, investors have gravitated toward the largest U.S. companies because of their stronger balance sheets and more diversified businesses, which should help them fare better during a recession. This is why shares of Nvidia Corp.
NVDA,
-0.56%,
Apple Inc.
AAPL,
-0.76%,
Microsoft Corp.
…