--- title: "Market Memo" source: https://www.perissosprivatewealth.com/insights/market-memo-25 publisher: Perissos Private Wealth Management published: 2024-09-05T12:21:49.09093+00:00 updated: 2026-05-06T19:25:15.466152+00:00 topics: market memo may 2023, equity market dispersion, artificial intelligence investment trends, s&p 500 performance oklahoma, market cap vs equal weight s&p 500 license: Educational content. Cite with attribution. Not personalized financial, tax, or legal advice. --- # Market Memo Monthly Market Summary: The S&P 500 Index gained +0.5% in May, outperforming the Russell 2000 Index’s -0.8% return amid shifting investor sentiment. Complete library of Market Memos Monthly Market Summary The S&P 500 Index gained +0.5% in May, outperforming the Russell 2000 Index’s -0.8% return. There was significant sector return dispersion with Technology, the top performer, gaining +8.9% and Energy, the worst performer, returning -10%. Corporate investment grade bonds produced a -1.8% total return as interest rates rose, underperforming corporate high yield bonds’ -1.2% total return. The MSCI EAFE Index of developed market stocks traded down -4.0%, underperforming the MSCI Emerging Market Index’s -2.4% return. May 2023 Recap: Stocks Continue to Diverge & Treasury Yields Rise May marked a continuation of this year’s investment trends. In the equity market, large cap stocks outperformed small cap stocks for a third consecutive month, while Growth stocks continued to outperform Value stocks. The Nasdaq-100 Index of growth stocks returned +7.9% in May, bringing its year-to-date gain to +30.9%. Congressional debt ceiling negotiations were the primary focus in the credit market, where a sharp rise in yields led both Treasury and corporate bond prices to decline. The Bloomberg Commodity Index traded lower for a sixth consecutive month, with declines across energy and metals. While falling commodity prices could help ease inflation, the declines suggest demand is softening and economic activity is slowing. One theme we are watching closely is the return gap within the equity market. As an example, the S&P 500, which weights companies by market capitalization, is up +9.7% year-to-date. However, the equal-weighted version of the S&P 500 has posted a -0.7% total return, underperforming the market-cap weighted version by -10.3%. This performance dispersion theme is also evident across S&P 500 sectors. Technology, Communication Services, and Consumer Discretionary each traded higher in May, with year-to-date returns exceeding +17.5%. In contrast, the eight remaining S&P 500 sectors each traded lower in May with negative returns thus far in 2023. The sizable performance gaps indicate that while the S&P 500 is trading higher, the gains and strength are concentrated in a relatively small group of sectors and mega cap stocks. Investors Excited by the Artificial Intelligence Revolution One of the factors contributing to Technology’s strong 2023 return is excitement around artificial intelligence, or AI. AI, which refers to the ability of a digital computer or a machine to perform tasks commonly associated with human intelligence, is being hailed as the next big technological advance. It has the potential to revolutionize the economy by increasing productivity, replacing and/or automating certain jobs, and expanding corporate profit margins. Companies are mentioning AI more on earnings calls, and investors are rushing to find the big AI winners. While AI has the potential to be transformational, we believe the AI revolution is in its early innings. We will continue to watch the theme, but investors’ excitement may be premature today. ## Frequently asked questions ### How did different stock market sectors perform in May 2023? In May 2023, large-cap growth stocks, specifically in the technology sector, outperformed while small-cap stocks and value sectors like energy faced declines. ### What is the difference between market-cap weighted and equal-weighted S&P 500 performance? The S&P 500 market-cap weighted index gained 9.7% year-to-date through May, while the equal-weighted version returned -0.7%, indicating that gains were concentrated in a small group of mega-cap stocks. ### What do declining commodity prices suggest about the economy? Falling commodity prices can help ease inflationary pressures, but they may also indicate softening demand and a slowdown in broader economic activity. --- Source: [Perissos Private Wealth Management](https://www.perissosprivatewealth.com/insights/market-memo-25) — fee-only fiduciary wealth management in Bethany, Oklahoma. 405.212.9690. This article is educational and is not personalized financial, tax, legal, or investment advice.