One of the complaints about the S&P 500’s rise last year following its tariff induced plunge in the spring was that the climb was driven by a very small number of stocks, especially those linked to AI and other new economy industries. The first weeks of 2026 saw a reversal of this trend, with participation broadening across the index and previously disregarded names catching a bid. Since the onset of the US military operation in Iran, however, the market has reverted to its hyper-focused ways, with gains concentrated in the semiconductor space and select technology companies – in fact, so far this year, semiconductor stocks have accounted for more than half of the S&P 500’s gain. Below are some other notable stats:
- to mid-May, only 22% of S&P stocks had outperformed the index over the preceding 30 days, the third lowest reading since 1996;
- the Goldman Sachs Non-Profitable Tech Index has outperformed the S&P 500 by nearly 4x so far in 2026;
- while the S&P 500 (which is weighted by market capitalization) recently hit a new all-time high, its equal weighted version is still below its pre-war level;
- on May 13th, the S&P set a record for the most stocks hitting a 52-week low on a day that the index reached a new high;
- the free cash flow yield offered by the Nasdaq 100 Index is at a record low and less than half the rate paid by a 10yr US treasury bond;
- if the Dow Jones Industrial Average had kept pace with the Nasdaq Index since the end of March, it would be more than 6000 points higher than it is now.
The chart below compares the S&P 500 to NYSE Composite, which tracks every stock traded on the NY Stock Exchange. As you can see, the top-heavy S&P has lapped the broad market since the beginning of March.
Portfolio Activity
In recent weeks, we used accumulated cash in DM Canadian Equity to add to TerraVest, Stella Jones, Element Fleet Mgmt., and Boyd Group. Rebalancing was also executed in DM US Equity.
Feature Stock
Fortinet Inc. (FTNT)
FTNT is a multinational cybersecurity and networking company that develops and sells advanced security appliances, software, and services. One of the company’s edges lies in its offering of integrated services, which connect multiple security components so they can share threat information and automate responses in real time. As well, unlike most of its competitors which have taken a pure software tack (relying to varying degrees on cloud infrastructure), FTNT has continued to sell its own hardware, particularly with respect to firewalls. Over the past year, the stock has gained 21% for DM portfolios, though the bulk of this return has come in the past two weeks following the release of first quarter earnings and guidance for the months to come. For Q1, revenue grew by 20% year-over-year, powered by a 41% leap in hardware sales. Among other things, management highlighted its investment into its own cloud infrastructure, with customers attracted to FTNT’s ability to provide a highly secure dedicated network. With AI significantly increasing the sophistication of cyber crime, we expect that business conditions will remain robust for FTNT.