Artificial intelligence has been the driving force for the stock market ever since late 2022, sending investors looking for exposure to the emerging technology. Now that momentum appears to be broadening beyond AI. The equal-weighted version of the S & P 500 is up 10.4% this year, through Tuesday’s close. Its market cap-weighted counterpart, meanwhile, has climbed 9.7% in that time. That puts the equal-weighted S & P on pace to outperform the conventional S & P on a yearly basis for the first time since 2022 — when ChatGPT debuted. Citigroup strategist Scott Chronert pointed to easing tensions between the U.S. and Iran as a driver for broader gains in the market. “Markets are clearly encouraged that the current Iran negotiations will have a good chance of success,” he wrote to clients. “The fact is that ‘broadening’ has already kicked in.” .SPXEW .SPX 5Y mountain S & P market cap weight vs equal weight Wells Fargo strategists also said this week that Wall Street will see an ” everything rally ” as cyclical stocks see a “catch-up rally.” The question for investors then is: Where do they put money to work outside of AI? UBS’ Gerry Fowler highlighted healthcare. The S & P 500 healthcare sector has struggled this year, losing more than 1%. Still, the strategist sees opportunities in the group. The sector has “increased appeal and within the U.S. specifically, there are indications that themes reflecting accelerating growth are now as appealing as the long-running appeal of AI capex beneficiaries — especially from a generally cheaper and less well-held starting point as earnings revisions turn positive,” Fowler said. One stock he pointed to as a potential future winner was Amgen . Shares are up 6.3% year to date. Other beneficiaries highlighted by UBS include Eli Lilly and Cardinal Health . Fowler also said beaten-down growth sectors, such as software, are seeing improved earnings revisions, which could give them an added boost. The iShares Expanded Tech-Software Sector ETF (IGV) is down 13% year to date, but ahead more than 14% in the second quarter.
