Loosening ties among shares mean company news is having a greater impact. DuPont Co., the biggest U.S. chemical maker by market value, climbed 1.8 percent on Jan. 22 after earnings exceeded projections.

That compares with Jan. 24, 2012, when the company lost as much as 1.2 percent even after releasing first-quarter earnings that topped estimates. The S&P 500 fell 0.1 percent that day on a report that showed sales of previously owned U.S. homes unexpectedly dropped.

Monsanto Co. rose 2.7 percent on Jan. 8 after reporting first-quarter results that were higher than analysts predicted. When the world’s largest seed company said in April that quarterly profit exceeded estimates and raised its full-year forecast, the stock slid 1.5 percent amid a 1 percent decline in the S&P 500 that followed a disappointing Spanish bond auction.

Stock Pickers

“A stock picker’s market is one where there’s real distinction between winners and losers,” said Jeffrey Davis, who oversees $5 billion as chief investment officer at Lee Munder Capital Group in Boston. “Investors are much more aggressive about individual equity selections now, rather than looking for top-down trends.”

They’re also getting more bullish. More than 50 percent of institutional investors polled this month said equities will offer the highest returns in the next year, the most since the quarterly survey of investors, analysts and traders who subscribe to Bloomberg began in July 2009.

Diverging prices have accompanied rallies in the past and the same thing is poised happen now, according to Fidelity Worldwide Investment. As correlations in the FTSE All-World Developed Index dropped to 12.4 in March 2000 from 28.3 in September 1998, the S&P 500 rallied 57 percent.

Record High

The gauge of market influence slipped to an almost five- year low of 20.8 in April 2006 from 34.7 in May 2003 as the S&P 500 surged to an all-time high of 1,565.15, reached in October of the next year.

“Falling correlations will help the equity prices of the stronger business with attractive long-term prospects,” said Paras Anand, who helps oversee $240 billion at Fidelity in London. “Typically this churn process will be positive for equity prices.”
Lower correlations won’t last because threats to the global economy haven’t disappeared, according to Supriya Menon, who helps oversee $400 billion as a strategist at Pictet & Cie. in Geneva.