These 6 Stock ETFs Tell the First Half Market Story

These 6 Stock ETFs Tell the First Half Market Story

Some mega-cap stocks are going up, but the market isn’t.

Reviewed by: Staff
Edited by: Kent Thune

It’s gut check time for investors and financial advisors. And not because of what you ate yesterday. The U.S. stock market just told its first half story for 2024. Were you listening?  

The first half is in the books, but the next six months will tell us a lot more about how many market debates get resolved. The Fed’s next moves, the bond market’s turmoil, how to deal with an accelerating corporate debt cliff, signs of a weakening labor market and an exhausted U.S. consumer.  

Oh, and did you hear, there’s an election in the U.S. in November? As if the slew of elections in India and Europe haven’t already created more decisions for global equity investors!

Stock ETFs: Looking Back to Look Forward

Thankfully, today I aim to equip investors with a straightforward account of the first half of 2024, using our favorite market measuring stick, ETFs. While we all know about New Years resolutions (which are typically forgotten by Presidents’ Day), perhaps a wealth-building resolution for investors of all types is to devote the next six months to understanding how ETFs are much more than revolutionary investment vehicles that trade on the stock exchanges.  

The evolution of the ETF industry in the past 30 years has enabled investors to assess what the markets are doing in a fraction of the time it used to take. And listening to the market’s story through ETF data may be just as valuable as what the collective of Wall Street strategists predicts about the future. So, whether you are working off the six pack of beer you enjoyed on July 4th or working on building a six pack in the gym, here is another useful six pack… of ETFs.

6 Stock ETFs to Track the U.S. Market

So here are six stock ETFs, one for each month remaining in 2024, which together paint a picture of a highly concentrated U.S. stock market so far this year. The six pack includes these securities. Their respective names, ticker symbols and first half 2024 returns (all positive and rounded to the nearest full percentage point) are as follows:

1H 2024 Stock ETF Performance: Key Takeaways

A few summary points will help fill in the market’s first half story for 2024, which is already having implications as we start the second half of the year. 

  • First, the returns for each ETF listed are lower than the one before it, and each successive fund invests in more stocks than the one ahead of it in the list.  
  • Translation: the “market” is being driven higher by a historically small number of stocks. Note that the Magnificent Seven are not only the total composition of MAGS (via stock shares and swap contracts) but are all part of each of the other ETFs listed below that one.  
  • XLG expands that list by 43 more to make 50 in total, and size continues to matter, as that ETF outpaced the rest below it. The more stocks we add, the more the pattern continues.

This is not atypical for the stock market, especially the one we grapple with in modern times. But the skew toward the top is indeed unique to this era, this year, and this market.  

One of These Things is Not Like the Others

So goes the old song, and it describes the plight of the rest of the stock market beyond the top 50 names. While there was a bit of return slippage going from 50 equal weighted stocks in XLG out to the full S&P 500 (SPY), look at what happens when we do two things: expand to 1,000 stocks and equal weight them instead of doing so by market capitalization. 

The drop off during the first six months of 2024 is remarkable, even to someone like me who has seen a lot in 38 years in the investment industry. A 2% return in six months, lower than US Treasury bill returns for that period, does not scream “bull market,” does it?

This is the type of intra-market analysis that investors would do well to spend more time doing as we move into the second week of the second half of 2024. History has shown that the stock market can run a long way in this type of top-heavy state. But it is the potential to return to a more even level of returns among the ETFs in this six pack that investors should monitor for risk management going forward.  

Rob Isbitts' Wall Street career spans 5 decades and multiple roles, all dedicated to providing clarity to investors by busting classic myths and providing uncommon perspective. He did so as a fiduciary investment advisor, Chief Investment Officer and fund manager for 27 years before selling his practice in 2020. His efforts now focus exclusively on investment research, education and multimedia. He started ETFYourself and SungardenInvestment to provide straightforward commentary and access to his investment intellectual property for portfolio construction, stocks and ETFs. Originally from New Jersey, Rob and his wife Dana have 3 adult children and have lived in Weston, Florida for more than 25 years.