S&P 500 at Record Highs, But 40% of Its Stocks Are in Bear Markets

The S&P 500 is trading within 2 percentage points of its record closing high. Look under the hood, though, and the picture is ugly: according to a MarketWatch analysis, more than 40% of the index’s stocks are technically in bear markets.

What happened

As of Monday’s close, more than 40% of S&P 500 stocks were trading at least 20% below their 52-week highs. Only 40.8% of stocks were above their 200-day moving average on Tuesday afternoon — the lowest reading since May 6, 2025 — meaning nearly 60% of the large-cap index is in technical downtrends. By some measures, the number of stocks helping drive the index higher hasn’t been this low since around the peak of the dot-com bubble; other indicators put breadth at its weakest since the spring 2025 tariff tantrum.

Why it matters

The headline index masks broad deterioration. Concentration risk is extreme: strong performance from a minority of AI highfliers has limited losses at the index level, but passive holders own far more weakness than the index price suggests. Rising yields are squeezing valuations outside the AI winners — the 10-year near 5.28% and the 30-year at 5.61% leave little room for multiple expansion in anything without accelerating growth. As of Monday’s close, 17 stocks were down 50% or more from their 52-week intraday highs, led by CoStar (CSGP), which some investors see as threatened by generative AI.

• 40%+ of S&P 500 stocks at least 20% below their 52-week highs
• 40.8% of stocks above their 200-day moving average — lowest since May 2025
• 17 stocks down 50%+ from their 52-week intraday highs
• 5.28% / 5.61% — 10-year and 30-year Treasury yields

What to watch

Wednesday’s PCE inflation report and Friday’s September payrolls could ease or worsen the rate squeeze. Watch whether AI leadership broadens — or the index starts cracking toward its members.

Related reading: Consumer Confidence Crashes to 12-Year Low in September

Are the beaten-down names outside the AI trade the next real opportunity, or value traps in a 5%+ rate world?

Sources:
MarketWatch — You Might Be Shocked by How Many Stocks Are in a Bear Market Right Now
MarketWatch — The Narrow Breadth of the Stock Market Is Getting Even Worse
Auto-posted by the Bull Lounge news desk. Not financial advice.