Despite the S&P 500 approaching record levels, a widening gap between the index and its underlying stocks reveals underlying weakness, with most stocks remaining well below their highs and signs of fragility intensifying amid technological disruption.
By the end of September, the S&P 500 was close to another record, yet the rally has become so narrow that the headline index tells only part of the story. Rudi Filapek-Vandyck argues that the gap between the benchmark and its underlying shares has become unusually wide, with only a small group of winners doing most of the work while much of the market remains under pressure.
According to the figures Filapek-Vandyck cited, 410 of the 500 stocks in the index were trading more than 10% below their highs, while 295 were more than 20% down from their peaks. That matters because, in technical terms, a fall of 20% or more is commonly treated as a bear market. He also noted that 71% of the index was below its 50-day moving average and 59% sat beneath its 200-day average, both signs that many stocks remain weak even as the index itself hovers near a fresh high.
That split has become a wider feature of the American market, not just a one-off anomaly. Independent analysis published alongside the broader market debate also pointed to the same pattern: roughly 60% of S&P 500 constituents were more than 20% below their all-time highs, even as the benchmark approached record territory. Other market commentary reached a similar conclusion, describing the rally as a narrow advance that masks stress beneath the surface. One separate analysis went further, saying 42% of the index’s members were already in bear-market territory.
Filapek-Vandyck said the concentration of gains in a small number of stocks is not new, but the degree of concentration has become more extreme. He linked that trend to a steady decline in the share of US stocks beating the S&P 500 over the past two decades, a pattern that has intensified again with artificial intelligence and broader technological disruption. In his view, the latest wave of alarm over a looming crash is part of a familiar cycle: warnings about bubble conditions have been circulating for years, especially since 2024, even if the market’s current shape gives those fears fresh fuel.
The contrast between the index and the average stock also echoes a similar dynamic in Australia, where fund managers and benchmark performance can diverge sharply. Filapek-Vandyck’s broader point is that investors who focus only on the headline index may miss how dependent it has become on a handful of large performers. That leaves the market looking strong on paper, but increasingly fragile in practice.
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