Goldman Sachs warns of a "hidden bear market" in US stocks, with around 60% of S&P 500 constituents having entered a bear market.
1 hours ago
The S&P 500 is just about 3% shy of its latest all-time high, yet roughly 60% of its constituent stocks have already fallen into bear market territory. Goldman Sachs trader Bobby Molavi noted this market dynamic is quite striking. He said the so-called "oddity" lies in the fact that the capital expenditures of tech giants that drive AI-related stock gains, and the companies receiving those investments, have both seen their stocks decline simultaneously. Molavi, Goldman Sachs’ head of execution services for Europe, the Middle East and Africa, wrote in a client note: “I don’t understand why both sides are being punished by the market, especially when the basic expectation remains that AI will change everything.” He described the current market landscape as a “stealth bear market.” A broad market rotation has taken place as investors pull out of AI-linked stocks over concerns about the sustainability of massive AI spending, with tech stocks suffering sharp losses in recent weeks. On the flip side, the majority of S&P 500 constituents have still posted gains over the past month, as capital flows out of crowded trading spaces into defensive sectors and underallocated areas.
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