What is today’s narrowing market breadth telling us?
November 12, 2025
Recent narrowing of US market breadth – the stock market’s upward movement driven by a shrinking number of leading stocks – has caused jitters among investors. Garrett Melson, CFA®, Portfolio Strategist, at Natixis Investment Managers Solutions, points out that the Magnificent 7 are certainly doing a lot of the lifting at the index level, but excluding these names the index is still up over 13% for the year – better than the average annualized return of the total market.* “There’s a whole lot more bark than bite to this narrow market narrative. Top heavy? Sure. Narrow? Not terribly so. And that’s more the rule than the exception,” said Melson.
- The Mag 7 have surged over 21% YTD (through Nov. 7), even after the recent pullback.*
- Even the Russell 2000 has posted 9% gains, after recouping April’s Liberation Day sell-off.*
- “If the S&P 493 (S&P 500® excluding Mag 7), equal-weighted S&P 500®, and Russell 2000 are all sitting within reach of all-time highs after last week’s pullback, the market probably isn’t as narrow as the narrative would have you believe,” said Melson.
- He believes market action the first week of November could be a healthy rotation as both defensive and cyclical sectors fared far better than tech – with real estate, healthcare, and financials positive over that time.*
Past performance is no guarantee of future results.
* Source: Bloomberg
Mag7 refers to a group of seven major technology stocks that heavily influence U.S. market performance.
The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization.
Russell 2000® Index is an unmanaged index that measures the performance of the small-cap segment of the U.S. equity universe.
CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.
This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Natixis Investment Managers, or any of its affiliates. The views and opinions expressed may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.
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