TheU.S. stock market’s rally to new highs has been propelled by so few stocks that it’s reminding some onWall Streetof the runup to the dot-com bubble.
Four of the last five closing records for the S&P 500 Index occurred even as decliners in the index outnumbered gainers. In the month of April, just 23 per cent of S&P 500 members beat the index, which Bank of America Global Research strategists says is the fourth-lowest monthly reading in the bank’s database going back to 1986.
“Don’t confuse a narrow rally at all-time highs with broad green light,” Mark Malek, chief investment officer at Muriel Siebert & Co., said by phone. He called the rally “disturbingly narrow” and said breadth has fallen “to one of the tightest levels in decades outside of the dot—com bubble.”
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Blockbuster earnings growth from semiconductor and mega-cap tech companies like Google-parent Alphabet Inc. have lifted benchmark indexes, but these all-time highs are being hit with just “the tip of the spear,” Malek said, referring to the small group of AI-related names.
He’s not alone. The lack of breadth behind the new index records is raising concerns across Wall Street.
The median index member remains 13 per cent below its respective high, which is the “lowest level since the dot-com bubble outside of briefly in mid-2023,” Ben Snider, chief U.S. equity strategist atGoldman Sachs & Co., wrote in an April 30 note.
Source: Drudge Report
