The stock market is on a wild ride, with major U.S. equity indexes soaring to new heights while individual stocks experience extreme volatility. A recent report from Charles Schwab & Co. highlights this discrepancy, showing that while the S&P 500 remains relatively stable, the average stock in the index has been much more erratic.
This unusual behavior has some experts questioning the sustainability of the current bull market. Kevin Gordon, senior investment strategist at Schwab, notes that the market is “acting a little more like a duck than a bull: calm on the surface but paddling like the dickens underneath.”
The disparity between index performance and individual stock performance is particularly pronounced in tech-heavy indexes like the Nasdaq Composite. While the index itself has seen minimal drawdowns, many individual stocks have experienced significant declines.
Despite this uneven performance, a small group of mega-cap stocks, dubbed the “Magnificent Seven,” have driven much of the market’s gains. Companies like Nvidia and Meta Platforms have helped offset weakness in other areas of the market.
Investors are now closely watching market breadth, or the number of stocks participating in the rally, as a key indicator of future performance. Improvements in breadth could help close the volatility gap between indexes and individual stocks, potentially paving the way for the rally to continue.
Overall, the market remains in a state of flux, with investors eagerly awaiting signs of sustained improvement in market breadth. As the market continues to evolve, the question on everyone’s mind is whether this trend can continue.
