S&P 500 breadth reaches dot-com lows as AI concentration masks broad market weakness
The S&P 500 is trading near record highs, but nearly half of its constituent stocks are moving in the opposite direction of the index. Goldman Sachs reports that 45% of S&P 500 stocks have a negative three-month beta, a level of divergence not seen since the dot-com bubble. This extreme narrowness is driven by mega-cap technology and AI infrastructure firms, which are masking weakness in the broader market. While the index has returned 14% this year, the median stock trades 16% below its 52-week high, and forward P/E ratios have fallen to 19 times, reflecting skepticism about the sustainability of current AI-driven profits.