A blistering run of gains has powered nearly all of the stocks in major U.S. indexes higher this year, making some investors uneasy that the nearly decade-old bull market will face another bout of volatility.
Twenty-six of the 30 stocks in the Dow Jones Industrial Average (.DJI) and 465 of those in the S&P 500 (.SPX) have risen this year, with industrial and real-estate companies racking up some of the biggest gains. Technology stocks also remain a driving force in the stock market, as shares of Amazon.com Inc. (AMZN), Facebook Inc. (FB) and others in the sector have been among the biggest contributors to the rebound.
But stocks’ broad losses Thursday reminded investors of how fickle those gains can be. Technology stocks and other market leaders fell as trade tensions between the U.S. and China resurfaced, pulling the S&P 500 down nearly 1% to erase its gains for February.
The index remains up nearly 8% since Jan. 1, its best start to a year since 1991 and has risen in 18 of the first 26 trading days of the year. Some investors interpret that streak as a sign that subdued volatility has given way to a buoyant market. Last year, daily gains and losses were more even, with the index rising 53% of the time.
All 11 sectors of the index are positive for the year, and investors, such as actively managed mutual funds, are still favoring technology and other fast-growing stocks, a winning trade throughout much of the bull rally.
Active managers of all styles suffered during the fourth-quarter selloff. But the strong gains across the market have lifted the fortunes of most fund managers—none more so than those who focus on technology and other fast-growing companies.
About 93% of growth managers outperformed the S&P 500 last month, according to Bank of America Merrill Lynch (BAC). Most, on average, also beat funds that focus on value stocks or a mix of both, the bank said.
The chase for returns has many fund managers reversing their trades from last year. Just three months earlier, most managers had been trimming their exposure to technology and communications stocks, Bank of America added. Now they are moving back in.
Shares of Facebook and Netflix Inc. (NFLX) have surged more than 25% this year, while Apple Inc. (AAPL) and Amazon have climbed more than 7%. Those four stocks, along with Google parent Alphabet Inc. (GOOGL) and Microsoft Corp. (MSFT), shed a combined $1.3 trillion in market value between Aug. 29—the date of the Nasdaq Composite’s last record—and Dec. 24, when the tech-heavy index hit its low. In just over a month, they have regained $686.3 billion.
Some of those tech titans, though, have warned of softer results this year, prompting many investors to say they fear the stock market is at a tipping point. Quarterly profits in the first quarter are on pace to contract for the first time in three years. If earnings estimates keep coming down, those investors say they are skeptical the market rally can continue for long.