The S&P 500 is trading near all-time highs, but the rally is running on fewer and fewer engines: only 22.9 percent of the index's stocks are trading above their 50-day moving average, and 78 percent of S&P 500 stocks were down in September, according to FactSet data cited by the Philippine Star.
As of October 2, the Nasdaq Composite logged its 25th straight session in which new 52-week lows outnumbered new 52-week highs — the longest such streak in 18 months. That means more than three out of every four S&P 500 stocks are in a downtrend even as the headline index hovers near record levels.
The divergence is stark. In past episodes of weak market breadth, the index itself was falling too — in March 2025, when tariff worries and recession fears intensified, and again in March 2026 during the so-called "SaaSpocalypse," when investors feared agentic AI would disrupt traditional software companies. This time, the market is near its highs while its foundation narrows.
AI spending carries the load
It is mostly semiconductors and a few tech giants keeping the indices afloat. Higher interest rates would normally hurt tech stocks, but companies are still spending heavily on AI, which keeps demand for chips and data centers strong. As long as earnings keep growing, investors continue to favor these companies despite higher rates.
The risk in narrow rallies is well understood: when only a handful of names carry an index, the market becomes fragile to any disappointment from those leaders. For now, the AI trade is holding the line — but the breadth data suggests the broader market is already voting otherwise.
Sources:
Market's narrowing breadth — Philstar
As of October 2, the Nasdaq Composite logged its 25th straight session in which new 52-week lows outnumbered new 52-week highs — the longest such streak in 18 months. That means more than three out of every four S&P 500 stocks are in a downtrend even as the headline index hovers near record levels.
The divergence is stark. In past episodes of weak market breadth, the index itself was falling too — in March 2025, when tariff worries and recession fears intensified, and again in March 2026 during the so-called "SaaSpocalypse," when investors feared agentic AI would disrupt traditional software companies. This time, the market is near its highs while its foundation narrows.
AI spending carries the load
It is mostly semiconductors and a few tech giants keeping the indices afloat. Higher interest rates would normally hurt tech stocks, but companies are still spending heavily on AI, which keeps demand for chips and data centers strong. As long as earnings keep growing, investors continue to favor these companies despite higher rates.
The risk in narrow rallies is well understood: when only a handful of names carry an index, the market becomes fragile to any disappointment from those leaders. For now, the AI trade is holding the line — but the breadth data suggests the broader market is already voting otherwise.
Sources:
Market's narrowing breadth — Philstar
