The tech dominance has been so strong that it has drawn some warnings about breadth -- or what share of the market’s components are doing well. One particular measure that compares performance of the median S&P 500 constituent with the broader benchmark shows breadth is at one of the narrowest levels of the past 40 years, according to Goldman Sachs. Bank of America analysts late last month pointed out that participation in the rally has been weaker than the rebound off the late-2018 lows.
“Eventually, narrow market breadth is always resolved the same way,” Goldman strategists including David Kostin wrote in a May 1 note to clients. “Often, narrow rallies lead to large drawdowns as the handful of market leaders ultimately fail to generate enough earnings strength to justify elevated valuations and investor crowding.”
This article was provided by Bloomberg News.