S&P 500 Hits New Highs Amid Extreme Divergence; Bank of America Warns the U.S. Stock Market May Be Nearing the End of a Bubble

Odaily Odaily reports that the S&P 500 index closed at a record high on the last trading day of May, but only a handful of its constituent stocks simultaneously hit new all-time highs, with the majority concentrated in the artificial intelligence sector. This has raised concerns about structural imbalances in the market. Analysts point out that while the index continues to reach new peaks, the rally is confined to a few heavyweight tech stocks, with market divergence approaching historically extreme levels, potentially signaling an accumulation of risks.

Data shows that on Friday, only 20 S&P 500 constituents hit new all-time highs, of which just seven were not directly linked to artificial intelligence. Michael Hartnett, a strategist at Bank of America, noted that this phenomenon closely mirrors the peak of the internet bubble in 2000, when similarly only about 20 stocks reached new highs.

In his latest report, Hartnett warned that speculative sentiment in the market persists, but against the backdrop of high interest rates and tightening policies by central banks worldwide, a market inflection point may be nearing. He advised investors to gradually shift towards defensive asset allocation.

The May rally in U.S. stocks was primarily driven by the semiconductor sector. Micron Technology surged 87.8%, Advanced Micro Devices rose 45.6%, Samsung gained 43%, and SK Hynix climbed 81%, propelling the Nasdaq index to a cumulative 25% increase over April and May, its best two-month performance in over two decades. (Jin Shi)