Market commentator The Kobeissi Letter has flagged a divergence in equity markets, noting that stocks heavily favored by U.S. billionaires are underperforming the broader S&P 500 — a trend it says has historically preceded stronger market performance.

Billionaire-Favored Stocks Lag Broader Market

In a post on X on Wednesday, The Kobeissi Letter cited the ratio of the Bloomberg U.S. Billionaires Investment Index to the S&P 500, which has fallen to 0.41, the lowest since April 2025. The index tracks the top 50 U.S.-listed stocks held by American billionaires.

The commentator noted the ratio has declined by 0.04 points since December, marking a drop similar to the March–April 2025 trade war period.

“Historically, such declines relative to the S&P 500 have preceded stronger equity market performance,” it said, adding that heavy concentration in a few mega-cap stocks often means downside pressure is largely exhausted once those names weaken.

Ceasefire Rally, Fed Outlook In Focus

Following the U.S.–Iran ceasefire, the S&P 500 surged 2.51% on Wednesday, closing at 6,782.81, as markets reacted to eased geopolitical tensions and a drop in crude prices. Futures pointed slightly lower in early Thursday trading, with investors weighing the rally against lingering risks and upcoming macro data, including the Fed's PCE inflation gauge and weekly jobless claims.

Recent Federal Reserve meeting minutes showed policymakers were not ruling out potential rate hikes, citing inflation risks driven by a surge in oil prices during the Iran conflict. However, crude prices plunged more than 15% following the ceasefire, easing some of those inflation concerns and helping support the market rebound.

Over the past year, major U.S. mega-cap technology stocks Apple Inc. (NASDAQ:AAPL) rose 30.2%, while Microsoft Corp. (NASDAQ:MSFT) fell 4.14% over the year, and Amazon.com Inc. (NASDAQ:AMZN) gained 15.78%. NVIDIA Corp. (NASDAQ:NVDA) gained 59.26% over the past year and Tesla Inc. (NASDAQ:TSLA) rose 26.10%, while Meta Platforms Inc. (NASDAQ:META) climbed 4.55% and Google-parent Alphabet Inc. (NASDAQ:GOOG) surged 95.42%.

By comparison, the S&P 500 has gained roughly 24.30% over the same period.

Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.

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