From Bloomberg via Yahoo Finance, May 26:
Rarely does a tech-powered stock rally come along that isn’t pilloried for the fragility of its foundation. Now, with a snowballing craze for artificial intelligence pretty much propping up the market by itself, the haters are out in force.
Never have so few stocks shouldered so much of the load in indexes such as the S&P 500 and Nasdaq 100, upon which trillions of passively invested dollars ride.
The top-heaviness of advance, on display all year, can be seen by comparing the Nasdaq 100 to a version of the same index that strips out its market-value biases. The equal-weighted one, which treats Apple Inc. the same as Dollar Tree Inc., has trailed the standard benchmark by 16 percentage points since January. In the S&P 500, the unweighted version is losing by the widest margin since Bloomberg’s data began in 1990.
To much of the pundit class, the situation is replete with risk: what happens to the market when the hype-cycle around AI ends? Peter Tchir, head of macro strategy at Academy Securities, sees it differently. Piling into a few heavyweights is just investors “being rationally selective.”....
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