To The Moon

Over the past 30 days, the $SPDR S&P 500 ETF Trust(SPY)$ has soared more than 3.5%, which is pretty dazzling considering signs of a slowing economy.

Data Analysis

Yet underlying investors' optimism is a worrying fact: only 17% of $S&P 500(.SPX)$ stocks have beaten the index over the past month. That’s a historic low!

Let’s crunch the numbers: out of the S&P 500 stocks, a mere 85 have outperformed the index over the past 30 days. That’s the lowest it's been in at least a decade.

By comparison, over the past ten years, the average has been around 49%, hitting over 50% in the latter half of 2022, late 2023, and early 2024.

Bottom line?

The US stock market’s surge is being driven by just a handful of heavy hitters, especially in the tech world.

For individual stocks, top performers include big tech names like $Tesla Motors(TSLA)$ $Adobe(ADBE)$ $Apple(AAPL)$ $Amazon.com(AMZN)$. On the flip side, laggards include $Nike(NKE)$ $Danaher(DHR)$ $CVS Health(CVS)$.

Market Impact

What does this mean for the market? It reflects an undeniable reality: a select few tech stocks wield unprecedented influence over the market, leaving other sectors in the dust.

This high concentration is both a blessing and a concern: while S&P 500 investors continue to benefit from the tech surge, they also face increased risks if the tech sector’s heat starts to cool. According to Goldman Sachs Research, the S&P 500 tends to see gains in the year following peak concentration.

There’s also concern that compared to more diversified options like the $Invesco S&P 500 Equal Weight ETF(RSP)$, the S&P 500 might be showing signs of overvaluation.

In a nutshell, the current rise of the S&P 500 seems heavily reliant on the strong performances of a few tech titans, while many other stocks are lagging behind. In this scenario, the future direction of the market remains highly uncertain.