From Nasdaq:

The S&P 500 has reached record highs, but fewer stocks are participating in the rally, raising concerns about future gains. A small group of heavyweights such as Meta Platforms, Apple, and Amazon have fueled most of the S&P 500’s gains.

Only 62% of large-cap stocks remained above their 50-day moving average, down from 87% in December. The concentrated rally in a small group of stocks, including the Magnificent Seven, could make the market more vulnerable to swift declines.

Tesla shares have fallen 22%, as breadth has narrowed and markets anticipate the Federal Reserve will cut rates later than expected. The S&P 500 real estate sector is down, and the Russell 2000 index of small-cap companies is off, due to these concerns.

Markets late Friday were pricing in cumulative interest rate cuts of around 110 basis points by the Fed’s December meeting, down from more than 160 basis points in cuts anticipated at the end of 2023. Investors are watching for U.S. consumer price data to assess potential inflationary pressures.

Top 10 companies by weight in the S&P 500 since 1999 have returned an average of 12.3 percentage points more than the broader index. However, more than half of the 100-plus sub-industries in the S&P 500 have been up by 20% or more since the bull market began in October 2022. Technology and communications services are the only ones to have outperformed the broader index.

Investors are urged to track market breadth, and monitor potential interests rate cuts and inflationary pressures that may impact future gains and market performance.



Read more: Wall St Week Ahead-Market breadth suggests narrowing rally as S&P 500 hits records