By Martin Baccardax
"Too good to miss" or "why can't anything else rally" might be the pithiest summations of the stock market's current status, with the S&P 500 at record highs but driven largely by a cohort of tech stocks that have left their rivals in the dust since the Iran war started in late February.
The benchmark has gained more than 8.5% this year, powered by a 16.8% rally since the last days of March, amid a stunning comeback for tech and chip stocks that has carried U.S. markets to record highs.
But the gap between the "haves" and "have nots" has started to expand again, to the point where the second quarter gain for the S&P 500 is nearly twice that of the benchmark's equal-weighted index.
And that's raising questions about the market's next moves now that Washington and Tehran have rejected each other's peace plans and the bulk of first quarter earnings numbers are in investors' rearview mirrors.
"What started as an AI/semiconductor conversation, however, should now be shifting to the rest of the market," said Jonathan Krinsky, managing director and chief market technician at BTIG.
"As semis and tech continue to push higher, the debate around whether it's sustainable or warranted seems to be growing in tandem," he added.
Krinsky notes that Friday's close for the S&P 500 was only the third time since 1990 that the benchmark had reached a record high when there were more new lows than new highs for stocks in the benchmark.
Digging deeper, he also finds something unprecedented about Friday's session: it was the first close in 30 years of 7% or more above the S&P 500's 50-day moving average with the fewest number of stocks also above the same moving average time frame.
"Even if the tech/AI price action is justified, there is a difference between tech leading when most stocks are going up, and semis going parabolic when most non-tech stocks are moving sideways or lower," he said.
Tech has most definitely been on a tear.
The PHLX semiconductor index has surged more than 55% from its low in late March, and is now holding just a few ticks below the 12,000 point mark, a record high for the sector benchmark.
An index of the Magnificent Seven tech giants, meanwhile, has surged around 20% from its year to date low in late March, and sits just 4 points shy of the all-time peak it reached late last week.
The Nasdaq, meanwhile, has surged more than 21% this quarter, taking its annual gain to just over 13%.
All that said, Krinsky is worried about a "catch down" for tech, as opposed to a "catch up" for stocks in other sectors, if the lows of S&P 500 continue to expand.
That might not come soon.
Robert Edwards, chief investment officer at Edwards Asset Management, argues that the economy is performing well, and a hot IPO calendar will dominate markets over the back half of the year and nearly $8 trillion parked in money market accounts waiting to find work.
"The strong are pulling away and we're not done yet," he said. "Sitting on the sidelines while the S&P climbs toward 7,700 is a painful regret. Too much cash is on the sidelines, rates are heading lower, and a record IPO cycle is coming. The setup is too good to miss."
RBC Capital Markets boosted its S&P 500 price target to 7900 last week, while HSBC lifted it to 7650, with a path to 8000, earlier on Monday.
Wall Street veteran Ed Yarndei, meanwhile, stuck an 8250 target on the benchmark over the weekend, and said the path to 10,000 points, which he has penciled in for 2029, may "arrive ahead of schedule."
Others, however, think the current tech-led rally will need something of a reset.
"There is no question this market is overbought and due for a pullback," said Jay Woods, chief market strategist at Freedom Capital Markets.
"Momentum is a funny thing and doesn't have to make sense all the time," he added. "Watch the news from the Strait or Hormuz this week. If things come to a resolution we may get one more move higher followed by a reversal. It could be the sell the news event that perplexes many investors."
Write to Martin Baccardax at martin.baccardax@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 11, 2026 12:00 ET (16:00 GMT)
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