Key facts
- The S&P 500 is up 14% this year, reaching record highs.
- Over 40% of S&P 500 stocks are down for the year.
- The median S&P 500 stock has gained only 4% in 2026.
- Memory-chip makers Sandisk and Micron Technology have more than tripled.
- AI chipmaker Nvidia has contributed nearly 2% to the S&P 500's gain.
- Fewer than half of S&P 500 companies trade above their 200-day moving average.
The S&P 500 has rallied 14% this year to record highs, but this performance is heavily concentrated in a few AI-related companies, masking weakness in the broader market. According to a Reuters analysis of LSEG data, over 40% of stocks in the index are lower in 2026, with the median stock gaining only 4%.
Memory-chip makers Sandisk and Micron Technology have more than tripled, while over 200 companies within the S&P 500 have seen their stock prices fall. A quarter of the index's constituents are down 11% or more.
The rally, which puts the S&P 500 on track for its fourth consecutive year of gains, is largely fueled by explosive earnings growth from AI-focused companies, contrasting with tepid profit expansion in other sectors. Concerns about the Federal Reserve's interest rate hikes and potential further increases have dampened demand for stocks in sectors like industrials, consumer goods, and real estate.
"Anything outside of the AI trade or companies that benefit from higher energy prices face huge headwinds in the form of higher oil and higher yields," said Ross Mayfield, investment strategy analyst at Baird. "The Fed has killed a lot of bull markets in the past, and if we get into an aggressive rate-hike cycle, that will be tough to stomach."
Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, noted that the strong narrative around AI is attracting significant investor attention, leading other types of stocks to be overlooked. "AI is such a powerful story. I don't think I've ever had as narrow a portfolio, in terms of themes, as I have now," he said.
While eight of the 11 S&P 500 sector indexes are up this year, led by energy (42%) and technology (32%), the technology sector alone accounts for over 10 percentage points of the S&P 500's overall gain, with energy contributing less than 1%. AI chipmaker Nvidia has been a significant contributor, adding nearly 2% to the benchmark's performance, followed by Apple, Micron, and Advanced Micro Devices, each contributing over 1%. Conversely, Tesla's 15% dip has subtracted approximately 0.3% from the index's rally.
Market breadth indicators suggest underlying weakness, with fewer than half of current S&P 500 companies trading above their 200-day moving averages, a rate that was at 40% a week prior, the lowest since May 2025.