Apple fell 0.1% after telling investors sales grew by 54%.

David Paul Morris/Bloomberg

What do you have to do to get a reaction around here?

For the second week in a row, the S&P 500 finished just a hair’s length away from the unchanged mark. After dropping 0.13% one week earlier, the index closed up one point, or 0.02%, at 4181.17, as traders and investors shifted their pieces around but didn’t have an impact on the overall game. The Nasdaq Composite fell 0.4%, to 13,962.68, while the Dow Jones Industrial Average dropped 0.5%, to close at 33,874.85.

It wasn’t that there weren’t “market-moving events.” They just didn’t move the market. President Joe Biden explained to America why he wanted to raise taxes to pay for free pre-K and other family-focused programs, and the market shrugged. Thursday’s first-quarter gross-domestic-product data—a blockbuster 6.4% annualized growth rate that managed to disappoint by missing the 6.5% forecast—didn’t faze investors.

Even this past week’s Federal Open Market Committee meeting failed to affect the market in the slightest, though, to be fair, nothing happened. “[Federal Reserve Chairman Jerome] Powell’s gotten into his groove,” says Nicholas Colas, co-founder of DataTrek Research. “For the moment, there’s no surprise on policy.”

Surely blowout earnings from the likes of Apple (ticker: AAPL), Microsoft (MSFT), and Amazon.com (AMZN)—the three largest U.S. companies by market size—would prompt a response? Not really. Apple fell 0.1% after telling investors sales grew by 54%. Microsoft declined 2.8% despite boosting sales by 19%, and Amazon dipped 0.1% after reporting its highest growth of any quarter in 10 years.

The lukewarm reception to these blowout numbers continues the pattern of the past eight months. Apple, Microsoft, and Amazon have been growing by leaps and bounds, but their stocks have trailed the S&P 500 by large amounts. As a result, their share of the index has started to shrink, observes Leuthold Group research analyst Phil Segner. Apple has gone from 7.3% of the index on Aug. 31 to 5.9% on April 29, while Microsoft has fallen from 5.9% to 5.3% and Amazon has decreased from 5% to 4.2%. “These firms have managed to slim down just by standing still,” Segner writes.

Yet the market still has a concentration problem. The S&P 500’s five largest stocks make up 21.6% of the index, down from 23.9% at their peak, but still far bigger than the 18.1% reached at the height of the dot-com bubble. At the same time, the smallest 300 stocks make up just 16.2% of the index, a sign they might have more room to run to get back to previous peaks. That could make the equal-weighted version of the S&P 500 a good bet—even if it has gained 34% since Aug. 31.

It’s not just the smaller companies that are holding their own. Small-cap stocks appear to be responding better to earnings than big ones, notes Christopher Harvey, U.S. equity strategist at Wells Fargo Securities. Large-caps have outperformed by just 0.06 percentage point when beating earnings, while 51% have underperformed even when they have topped forecasts. Small-caps, on the other hand, have outperformed by 0.77 point when beating earnings.

But maybe there’s more going on than meets the eye behind the S&P 500’s dull facade. The Invesco S&P 500 Pure Growth exchange-traded fund (RPG), which had been having a great April, fell 2.1% this past week, while the Invesco S&P 500 Pure Value ETF (RPV), which had been lagging, rose 1.5%. Even better to see: The Invesco S&P 500 High Beta ETF (SPHB), home to some of the weakest, most volatile stocks in the market, gained 2.6%.

All this suggests that investors were looking to add some risk this past week—and that maybe the reopening trade might suddenly revive enough for one last push.

In fact, DataTrek’s Colas sees the reopening trade lasting through May and June before investors start to worry about whether the Fed will announce the plans to start reducing bond purchases at its Jackson Hole, Wyo., meeting in August.

Maybe then we’ll get a reaction.

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Write to Ben Levisohn at Ben.Levisohn@barrons.com

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