Commentary: large and mega-caps outperform
In response to a hotter than expected US labor market data, general equity markets declined during past week, as illustrated by a 1.2% drop in S&P 500 equal weight index. In contrast to broad markets, however, the large and mega cap stocks from Technology and Communication sectors rallied, leading to slight overall gains in S&P 500. Generally speaking, the large growth companies outperformed, while small, mid-sized, and value stocks experienced losses.
Interestingly, the US labor market data provided mixed signals. While non-farm payrolls came in well above the consensus forecast, the wage growth was reported at lowest level in more than a year. In addition, unemployment rate remained unchanged at 3.8% (vs a 3.7% forecast). This mix of data suggests that strong hiring took place due to a higher supply of workers, implying a more favorable inflationary environment.
