Evidence is compelling that the U.S. recession ended in the fourth quarter of last year and a new economic expansion is well underway. The downturn was particularly painful for the manufacturing and technology sectors, putting a serious damper on corporate profits. However, the recession has proven to be one of the mildest on record.

Equity markets have responded differently to the good news about the economy. The S&P 500 and Nasdaq 100 indices have lost ground since the beginning of the year. In contrast, the S&P 400 Index, S&P 600 Index and Russell 2000 Index have been rising almost continuously since their September lows and are trading near their all-time highs.

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