The S&P 500 keeps climbing, but most of its stocks are not.
Only 22% of S&P 500 constituents have outperformed the index over the past 30 days. That is the third-lowest proportion recorded since 1996. Roughly four out of every five stocks in America’s benchmark index are dragging behind the headline number.
The so-called Magnificent 7 - Apple, Nvidia, Microsoft, and their mega-cap tech peers - now command nearly 35% of the S&P 500’s total market capitalization. The top 10 firms hold 38% of the index’s market cap and 30% of its profits.
Information Technology and Communication Services alone account for 46% of the index’s total value.
Only 22 stocks in the entire S&P 500 are currently at all-time highs. For context, that figure peaked at 97 stocks in March 2013.
As of early May, roughly 51% of S&P 500 stocks were trading above their 50-day moving average. Half the index is below a key short-term support level while the index itself sits near highs - a contradiction.
Goldman Sachs and Bank of America have flagged risks in this concentration. Historically, extreme narrowness precedes volatility. When an index depends on a small group of stocks, any stumble can cascade violently.
The S&P 500 recently touched 7,398. But the equal-weighted version, where every stock has the same influence, tells a much more modest story.
The Magnificent 7 dominate partly because passive fund inflows mechanically buy whatever is already largest. Bigger market cap means bigger index weight means more passive buying.