The new all-time high of the Dow Jones Industrial Average provides fresh confirmation that the mega-caps are back. A recurring mystery of the past couple of years has been the stagnation in the share prices of the world’s largest companies, even as the indices around them rallied. Giants such as Wal-Mart and Microsoft suffered the indignity of seeing their names appear on “value” screens, to be bought because they were too cheap. But in spite of near-universal sentiment that they were undervalued, their stocks continued to languish.

The recent rally in US stocks has been led by the large-caps. The Russell Top 50, covering the biggest “mega-caps” is now up 9.55 per cent for the year, almost 2 percentage points better than either the broader Russell 1000, or the Russell 2000 index of smaller companies. Since the recent rally began on July 17, the Top 50 is up 10.13 per cent, against 5.8 per cent for the Russell 2000. In that period Microsoft is up 22.5 per cent, Wal-Mart 12.6 per cent, and McDonald’s 20.4 per cent.