"Goldman notes that in past episodes of comparably sharp momentum rallies with the market near a high - including mid-1998, late 1999, and late 2021 - subsequent S&P returns were soft. The market breadth signal is flashing a similar warning: the median S&P 500 stock sits 13% below its 52-week high even as the index registers new records."
Top S&P 500 companies now generate a much larger share of index profits and hold a larger share of market capitalization than in 1996. AI companies account for most venture capital funding and a substantial portion of investment-grade bond issuance. AI is described as influencing markets so strongly that it effectively defines market performance. Equity strategists compare the current AI boom to late-1990s internet buildouts, with some seeing parallels to 1999 and others to earlier infrastructure years. Technology dominates S&P 500 returns, with Nvidia contributing a large portion of year-to-date gains. Momentum factors tied to AI have surged sharply, while market breadth remains weaker, suggesting potential softness after prior momentum peaks.
Read at Fortune
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